Focus on OSB: North America | 13
had been announced as of early 2024. Tolko began production at its Alberta facility during May and Roy O Martin finished its second Texas factory in June. The big Huber mill in Mississippi continues apace and should be completed by early 2026. The remaining four announced mills have not yet broken ground.
In other notable news, Weyerhaeuser will build a greenfield laminated strand lumber (LSL) mill in Arkansas. LSL is an engineered lumber based on OSB process technology. This plant should start up in 2027. Continued good times during 2025 are uncertain. Reputable economists believe that promised policies of the second Trump administration regarding tariffs on Canadian forest products, undocumented immigrants, and interest rates may adversely impact the US housing market and related demand for OSB. Canadian makers that rely on the US market could especially feel the pain.
2024 HOUSING STARTS MODESTLY FELL AS HOUSING REMAINS EXPENSIVE After peaking at 1.88 million units in 2021 following 15 years of slow recovery since the 2008 recession, North American housing starts have trended down. North American housing starts fell to 1.59 million units in 2024 from 1.64 million in 2023 and 1.79 million in 2022. During 2024, US housing starts fell 54,000 units while Canada achieved 4,000 more starts. While methodologies to estimate the US housing deficit differ, the expert consensus is that a shortfall of about 3 to 4 million units has accrued since the US housing bust of 2008 and the associated global recession. The economics team of the investment
manager First Trust Advisors wrote: “The home building sector seems strangely slow given our population growth and the ongoing need to scrap older homes due to disasters or for knock-downs. We think government rules and regulations are likely the major hurdle for builders in much of the country, but home construction might also be facing headwinds from a low unemployment rate (which makes it hard to find workers) as well as relatively high mortgage rates.” Mortgage interest rates during 2024 for the most common mortgages (25-year loan with a fixed rate for five years in Canada and fixed rate for 30-year loan with a fixed rate for 30 years in the US) fell less than expected. A year ago, the National Association of Realtors (NAR) had predicted that the 30-year fixed rate mortgage would average 6.3% in 2024, but US mortgage rates never fell below about 6.5% in 2024. “Mortgage rates have refused to budge
for several months despite several rounds of short-term interest rate cuts by the Federal Reserve,” said Lawrence Yun, chief economist at NAR. “When combined with elevated home prices, housing affordability remains a major challenge.” NAR calculates that seasonally adjusted existing-home sales fell by 5% in January 2025 compared to December 2024. Higher mortgage payments compared to unchanged family incomes plus worries about personal job security have caused middle-class home buyers to hesitate. Starter home sales have slowed down more than upscale housing because potential first-time purchasers are especially impacted. Canadian mills consistently supply almost
30% of US demand for OSB. In turn, about 65-70% of Canadian OSB production is normally exported to the US. 2024 was no exception to this international trade pattern. The US also imports minor OSB volumes from the European Union (Latvia, Romania, and elsewhere). Since Russia’s 2022 invasion of Ukraine, the US no longer imports OSB from Russia or its ally Belarus.
OSB PRICE AND PROFIT DEVELOPMENT Three publicly traded forest products manufacturers (Louisiana Pacific, West Fraser, and Weyerhaeuser) make more than half of North American OSB. Because average market prices during 2024 were higher than 2023 and manufacturing costs remained flat, these companies reported good OSB manufacturing segment results. Combined OSB segment revenue grew to US$4.4bn in 2024 compared to US$4bn in 2023 and 2024 EBITDA margin increased to 27% from 23%. However, 2024 started off better than it ended, with prices in the first half of the year better than the second half. Average second quarter 2024 price of US$456 per m3 fell by 25% to US$337 per m3
of OSB in the third
quarter. Market prices partially recovered in the fourth quarter and OSB market prices have remained near 2024 prices through early March 2025. OSB segment financial results roughly
tracked OSB prices during 2024. EBITDA margin peaked at 40% in the second quarter before trailing off to 16% in the fourth quarter. The overall industry continues to perform well as typical OSB margins remain double the pre-pandemic norm. When asked about the announced
Above: Roy O. Martin commenced operations in 2024 at its second greenfield mill in Corrigan, Texas PHOTO: ROY O MARTIN
www.wbpionline.com | April/May 2025 | WBPI
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