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Lumber & Wood
Production of many lumber and wood products is poised to advance. The push from remodeling will exceed the push from new construction, as the nation's homebuilding industry continues to bounce along the bottom rather than experience meaningful recovery. The overall increase in demand for lumber and wood products will be modest. Demand for pallets and crates will closely track the growth of overall economic activity, with usage for international trade-related shipments growing much faster than usage for domestic shipments.
Wood pellet manufacturing, biofuels and cogeneration are emerging sources of demand. Depressed activity in non-residential construction will limit demand; the areas of non-residential construction that will see the most growth in 2012, such as utility construction, are not wood-intensive.
Paper & Pulp
Moderate support for paper and pulp prices will come from the expansion of GDP, and the low value of the dollar will restrict pulp and paper imports and stimulate exports. New paper mills in China and other developing countries will be a major force powering the recovery of global pulp markets but will create more competition for U.S. paper mills. The limited supply of wood chip and wood fiber waste from the production of lumber for construction will help support pulp prices. The recent closing of many less-efficient paper mills in the Southeast will restrain growth in the regional demand for market pulp.
Despite improving short-term market conditions, the steep reductions in demand for some types of paper reflect more than just negative cyclical forces. Increasingly, various forms of electronic communication are substituting for printed materials. This trend will intensify due to the proliferation of more affordable and more convenient broadband Internet access.
Furniture
Furniture sales to households have stabilized - at relatively depressed levels - and will rise moderately. The primary culprits behind the steep plunge in sales were the deep-seated housing recession and the financial crisis. Going forward, slightly higher turnover of existing homes, a slight upturn in home sales, and the end of home price depreciation are positives for households' demand for furniture; but slow recovery of jobs, limited prospects for substantial gains in disposable personal income, a higher savings rate and an abundant supply of good used furniture will temper the recovery.
The outlook is worse for...