|
|
|
|
August 7, 2009
Dear Friend,
LPX's $50 per 1,000 sq ft reduction
in unit production costs in the June 2009 quarter is impressive,
combining volume gains, lower fiber costs lower transporation and lower
natural gas dependent input costs. This, combined with the plausible
equity offering that the shelf registration implies, suggests LPX will
survive.
However, industrywide
capacity remains adequate for 2.5 to 3.0 mm starts or else closer to 80%
to 90% OSB penetration of the panel market. In our opinion the 2010 to
2012 outlook for a gradual recovery from 0.5-0.6 mm housing starts in
2009 towards 1.25-1.50 mm starts in 2012 does not encourage robust
returns though gradual and steady improvement.
Faithfully,
John C. Tumazos
|
Copyright © 2008 John Tumazos Very Independent Research,
LLC
|
