West Fraser Second Quarter Earnings Show Mixed Outlook

West Fraser offered a range of outlooks in its second quarter earnings report. It noted that over the medium term, improvements in housing affordability supported by U.S. government policy changes and the expected normalization of inflation and interest rates, a large cohort entering the typical homebuying stage, and the advanced age of the U.S. housing stock (with a median home age of approximately 44 years) are expected to support new home construction and repair and renovation activity that generates lumber, plywood and OSB demand. And that over the longer term, growing market penetration of mass timber in industrial and commercial applications is also expected to become a more significant source of demand growth for wood building products in North America.

The company pointed to a seasonally adjusted annualized rate of U.S. housing starts of 1.43 million units in June 2026, with permits issued for 1.37 million units, according to the U.S. Census Bureau. However, it noted near-term uncertainties for new home construction and repair and renovation spending, owing in large part to weak consumer confidence and the level of mortgage rates and housing affordability. But it also noted unemployment remains relatively low in the U.S. Further, the U.S. central bank has cut its key lending rate a total of 175 bps (basis points) since September 2024. 

“While recent rate trends are directionally supportive for the broader housing industry, competing forces continue to create uncertainty around the near-term path of interest rates and rates of inflation. U.S. employment growth has shown signs of slowing, while the conflict in the Middle East and the potential inflationary effects of tariff and other government policies may continue to exert upward pressure on inflation and interest rates. Given these developments, demand for our wood building products may continue to be challenged and even decline over the near term should the broader economy and employment slow or the trend in interest and mortgage rates negatively impact consumer sentiment and housing affordability,” the company stated.

Meanwhile, West Fraser anticipates continued improvement in industry demand across Europe and the U.K. in the near term. In the longer term, it continues to expect demand for its European products to grow as use of OSB as an alternative to plywood and timber framing as an alternative to brick and block construction for new home construction expands. An aging housing stock is also expected to drive sustained repair and renovation spending, which will continue to support demand for wood building products. 

“That said, ongoing geopolitical developments, including the inflationary effect of the conflict in the Middle East, may adversely impact near-term demand for our EWP products in the region. Despite these risk factors, we are confident that we will be able to navigate demand markets and capitalize on the long-term growth opportunities ahead.”

In its North America EWP segment, West Fraser expects somewhat softer demand for its OSB products in 2026, and acknowledged risks to its demand forecasts given the near-term uncertainties. In light of these factors as well as its High Level, Alberta OSB mill curtailment that was completed in the second quarter, West Fraser anticipates reiterating 2026 North American OSB target shipments of 5.9 to 6.3 billion SF.

In its Europe EWP segment, West Fraser expects 2026 demand for its MDF, particleboard, and OSB products to remain stable or show modest improvement compared to 2025 levels. It is forecasting 2026 OSB shipments in the range of 1.0 to 1.25 billion SF.

West Fraser also noted that global events during the first quarter of 2026 contributed to an increase in oilbased input costs, including fuels, chemicals and waxes. Resin and wax costs increased by approximately $13 million in the second quarter compared to the first quarter across all of its divisions due to these factors, notiing that resin and wax costs generally move in the same direction as crude oil prices. 

“We estimate that a $10 per barrel change in crude oil prices impacts annual resin and wax costs by approximately $15 million, with other factors held constant,” In addition, transportation costs, particularly in the U.S. South, also increased due to an increase in oil-based input costs as well as a reduction in transportation labor availability. “Ongoing geopolitical uncertainty in the Middle East and broader macroeconomic conditions create uncertainty regarding the duration and magnitude of these impacts.”

Based on its current outlook and assuming stable market demand conditions and no further extension of lead times for ongoing or planned projects, West Fraser plans capital expenditures for 2026 to remain within the $300 million to $350 million range.