The world's largest democracy is on Canfor's horizon.
After trade barriers were lifted in December, Canfor began shipping nominal amounts of lumber to India but CEO Don Kayne said Friday the company has launched a one-year process to determine where to put its resources in the country, and sees a China-size market down the road.
"We're looking at it as where China was 10 years ago, and we're in the very initial stages of trying to get our heads around what parts of India provide the biggest opportunities," Kayne said during a conference call with analysts and the media.
Kayne expects competitors will also work to make inroads and noted European producers are exporting into India, home to 1.2 billion people.
"India, like China, has a culture of using wood going back many, many year and that's the attraction... it's just a question of where SPF [spruce, pine, fir] sits in that," Kayne said.
In May, China overtook the United States as the largest export market for B.C. lumber, taking in 470 million board feet in $122.1 million compared to 526 million board feet for $118.6 million south of the border.
In the second quarter, Asian shipments led by China increased by 71 per cent from a year earlier, but the U.S. still leads in total imports for the year up to May, with a total of $660.8 million of lumber compared to $453.9 million into China.
Kayne said he believes the industry can double the volume going to China over the next five years. Asked about talk of inventory in China now at its maximum, Kayne said Canfor hasn't noticed.
"We've heard the rumours, but we're not seeing the result of that," Kayne said. "We continue to not see any interruption of our flow into the marketplace."
Kayne was not so upbeat about the U.S.
"Despite the fact that we are seeing a few more signs of a positive recovery of the U.S. economy, that recovery will be a very, very gradual process," Kayne said, adding it should take another 18 to 24 months for the U.S. to reach more normal demand levels.
Second quarter earnings stood at $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.
