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http://seattletimes.nwsource.com/htm...charley19.html
Need for hurricane repairs spurs surge in lumber prices

http://www.canada.com/national/natio...8-bf80450681c4
Hurricane, B.C. fires fuel lumber prices

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http://www.canada.com/national/natio...8-bf80450681c4

Hurricane, B.C. fires fuel lumber prices
Demand growing: 'Likely that we will see prices go through the high of
1999'

John Greenwood
Financial Post

August 18, 2004


VANCOUVER - Prices for softwood lumber are poised to breach a
five-year record on higher demand in the wake of Hurricane Charley and
forest fires raging across British Columbia, an analyst said
yesterday.

"There is just this confluence of factors that is working to push
panel and lumber prices higher," said Kevin Mason, an analyst at
Equity Research Associates. "Even before the fires and the hurricane
[prices] were way up and now it looks very likely that we will see
prices go through the high of 1999."

The current price of 1,000 board feet of two-by-four lumber was
sitting at US$465 last week, according to Random Lengths, a leading
industry research firm.

Mr. Mason said that is just US$5 shy of the 1999 record.

Oriented strand board, a popular replacement for plywood, is also on
the rise, trading at US$385 for 1,000 square feet. That's still a long
way from its high of US$520 this year. But even at today's prices the
handful of major producers that make OSB are "incredibly profitable,"
Mr. Mason said.

Producers include Brascan Corp. subsidiary Norboard Inc.,
Louisiana-Pacific Corp. and Ainsworth Lumber Co. Ltd.

The market has been strong for most kinds of lumber for the past year
and a half because of the continuing housing boom in the United
States.

But now demand is also being helped by a slew of other factors.
Hurricane Charley, which devastated parts of Florida on the weekend,
has triggered expectations of even more homebuilding and home repair
activity. The homebuilding industry accounts for 70% of North American
lumber demand.

Another factor is the summer forest fire season in Western Canada --
one of the worst in B.C. history. It has created fears producers will
be adversely affected through destruction of timber supply and
interruption of operations.

"So far producers are not talking about heavy impact in [areas of the
province where they are most active] so I'm not sure how dramatic the
actual impact will be. But any kind of a hint of trouble is enough to
put pressure on pricing in a market like this," Mr. Mason said.

Another factor affecting prices is a shortage of rail cars, which has
made it difficult for lumber companies to make deliveries to buyers in
other parts of the United States and Canada. The rail car troubles
were most serious in the spring, but there is now concern the fires
could put a bottleneck on rail car traffic again.
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http://seattletimes.nwsource.com/htm...charley19.html

Need for hurricane repairs spurs surge in lumber prices

By Claudia Carpenter
Bloomberg News

NEW YORK — Lumber prices in Chicago rose to the highest in 10 years as
Florida's homeowners and businesses rebuild after Hurricane Charley,
the second-most-destructive U.S. hurricane after Andrew in 1992.

Lumber futures for September delivery rose $15 yesterday, the maximum
allowed by the Chicago Mercantile Exchange, to $442 per 1,000 feet of
two-by-fours, the highest for a most-active contract since March 1994.
The 3.5 percent gain was the biggest in seven months.

Before Friday, lumber prices gained 36 percent in the past year as
North American housing demand surged. Charley struck Florida's
southwest coast five days ago, causing $11 billion in residential
losses, the state's Department of Financial Services said. An
estimated 88,375 housing units were damaged and 2,494 were destroyed
by the storm, displacing 144,623 people, the Federal Emergency
Management Agency said.

"We have seen significant increases" in lumber sales in the
hardest-hit Florida towns of Punta Gorda and Port Charlotte, said Ron
Jarvis, vice president of lumber merchandising at Atlanta-based Home
Depot.

Sales in other parts of the state hit by Charley have been "sporadic,"
he said. 'Rebuilding probably takes weeks to months to get under way."

Home Depot shipped an extra 440,000 sheets of plywood into Fort Myers
and Tampa area stores before the storm and froze prices in the state.

"The amount of lumber that's going to be needed to rebuild is bullish
for the market," said Stephen Davis, a futures broker at R.J. O'Brien
& Associates in Chicago. "I have a few clients who trade lumber, and
they're trend followers. The trend in lumber is up." Prices may reach
$450 to $465 in the coming weeks, he said.

Home Depot increased its lumber inventory threefold in distribution
centers in New Orleans, Tampa and Miami by July 15 in preparation for
the hurricane season, Jarvis said.

"Prior to the hurricane, we sold a tremendous amount of plywood for
wind and door security, and after the hurricane, we have seen sporadic
sales," he said.

The company doesn't use futures to lock in lumber prices and isn't
selling the wood at a loss now, he said. The price freeze on plywood
in Florida will be "as long as possible," he said.

Claims total estimated

NEW YORK — Hurricane Charley likely will cost insurers at least $7.4
billion, according to the Insurance Institute, an industry trade group
that based its estimate on initial claims data from Florida residents
and businesses.

The Insurance Institute made the estimate after conversations with the
biggest insurers serving the state, said Robert Hartwig, the group's
chief economist. Earlier forecasts that said losses could be as much
as $10 billion to $14 billion were derived from computer models.

Hartwig said Hurricane Charley proved to be a weaker storm that cut a
more narrow path in areas less affluent than those struck by Hurricane
Andrew. Hartwig expects about 300,000 claims to be filed from
Hurricane Charley — about half the amount filed from Hurricane Andrew.

Insurers changed their policies in the wake of Hurricane Andrew,
Hartwig said. Instead of set dollar deductibles, policies have
deductibles based on a percentage of the insured property, which
generally require the insured to pay a larger portion of the damage.

In addition, the blow for insurers should be cushioned by the
multibillion-dollar Hurricane Catastrophe Fund, which the state
established after Hurricane Andrew. The fund provides reinsurance, or
insurance for the companies themselves, to help them pay for major
disasters. Built up by payments from insurers that operate in the
state and a variety of other sources, it has $6 billion cash plus the
capability to issue an additional $9 billion in bonds.