Forest products producer Canfor Corp. (TSX:CFP) is hoping India becomes the new China and eventually delivers explosive demand for Western Canadian lumber.
Lumber shipments have begun to trickle into the world’s largest democracy since trade barriers were lifted last December, but volumes are low for now and Canfor CEO Don Kayne says India is where China was a decade ago.
In May, China overtook the United States as the largest export market for B.C. lumber. In the second quarter, Asian shipments led by China increased by 71 per cent from a year earlier. Kayne said he believes the industry can double the volume going to China over the next five years.
Looking at its next emerging market, Canfor is at the very early stages of a 12-month effort to determine what parts of India provide the greatest opportunities and on which products it should focus its efforts.
Like China, India has a culture of using wood in home construction, but maybe not as much for quality SPF, or spruce, pine and fir, timber produced in Canada. Besides domestic rivals, European producers are the largest competitors in India, says Kayne.
Late Thursday, Canfor reported that its net profits dropped sharply in the latest quarter as revenues fell on weak lumber prices.
The Vancouver company said earnings fell to $26.2 million for the second quarter, down from $43.7 million from the year-ago period.
Sales decreased to $619.1 million from $634.7 million.
Canfor said it saw little change in the underlying factors hurting the recovery of North American lumber markets.
On the Toronto Stock Exchange, Canfor’s shares lost 18 cents, or 1.76 per cent, at $10.02 in early afternoon trading.