Two BC Mills Temporary Shutdown Impacts Lumber Prices

on May 6, 2019

stack of palletsIn early 2018, softwood lumber prices were at an all-time high and the industry itself was volatile. Mills couldn’t keep up with the demand, yet experts predicted the prices would eventually go down.

Of course, they were right. As summarized in this recent international trade article on ajot.com:

“Softwood lumber prices have generally fallen faster than the costs for sawlogs throughout the world in late 2018, resulting in lower margins for the sawmilling sector, according to the WRQ. In western US and western Canada, margins fell to unprofitable levels and many sawmills in the region curtailed production in late 2018 and early 2019.”

Two of the mills to curtail production in early 2019 include West Frasier and Conifex. In this article, Doyle Potenteau wrote:

“In January, two other lumber companies announced curtailments.

“West Fraser announced that it would be curtailing production at three B.C. sawmills…Also, Conifex said it would be curtailing operations at its Fort St. James sawmill for three weeks commencing Feb. 4 ‘due primarily to continued high log costs and lumber market conditions.’”

Recently, two more major mills halted operations, prompting other mills to attempt to fill the demand.

According to a recent tweet from Madison’s Lumber Prices:

“Canfor announced it will temporarily curtail operations at all British Columbia sawmills April 29 due to low lumber prices & high fibre costs, reducing production output by 100 million board feet. Canfor has 13 sawmills in Canada, w total annual capacity of 3.8 billion board feet.”

Canfor has 13 sawmills in Canada, 12 of which are in British Columbia. The curtailment is set to last a minimum of one week for those closing. Two mills are scheduled to close a second week.

Additionally, according to Potenteau’s article, Interfor said it will “temporarily reduce production across its operating platform in the B.C. Interior during the month of May 2019 due to a combination of weak lumber prices and continuing high log costs.”

As for those buying lumber, the prices depend on the species, size, and grain of wood. Mills that sell Spruce, Pine, and Fir have seen exceptional sales and have increased prices accordingly.

On the flip side, competition between mills has, for the most part, driven prices for Oriented Strand Board and various types of Plywood down. In some cases, deep discounts were reported. Discounts varied by load volume, as many buyers were hesitant to purchase beyond immediate needs.

A smart purchase strategy for lumber factors in the most current statistics and outlook on lumber supply and cost. Packnet remains in tune with the state of the lumber industry so that we can offer the most economical pallet and container solutions available. Feel free to contact us with any questions: 952-944-9124; CustomPackagingSolutions@packnetltd.com.