BRITISH COLUMBIA - Canadian lumber giant Canfor continues restricting production - this time shutting down one British Columbia sawmill and permanently eliminating a shift at another.
The company said the shutdown at its Mackenzie mill, technically an indefinite curtailment, is necessary because of poor lumber markets, challenging operating conditions, and the high cost of fiber. The shift elimination at Isle Pierre, beginning September 20, is prompted by the mountain pine beetle epidemic and an overall insuffiecient lumber supply.
“We deeply regret the impacts that these capacity reductions will have on our Mackenzie and Isle Pierre employees, contractors, their families and the local communities,” said Stephen Mackie, Senior Vice-President of Canadian Operations, Canfor. “The B.C. forest industry is continuing to face very significant challenges. None of our temporary or permanent curtailment decisions have been made lightly, nor are they a reflection on the hard work and dedication of our employees.”
In combination with previous curtailments and the shutdown of its Vavenby sawmill, Canfor will lose 400 million board feet of lumber. Canfor sold cutting rights to its Vavenby mill to Interfor in June.
Canfor isn't the only Canadian mill struggling. British Columbia - Canada's largest lumber-producing province - exported just over 514 million board feet of lumber to the U.S. in October 2018, down from 645 million board feet from the same time 2017. Many Canadian lumber leaders have taken a hit - including West Fraser, Conifex, and Interfor - and restricted lumber production. West Fraser and Canfor have curtailed production more than once.
All cited challenging lumber markets, high log costs, log supply constraints, falling lumber prices, and U.S. import tariffs as factors.
Softwood lumber import tariffs of around 21 percent were levied onto Canada last year. The National Association of Home Builders (NAHB) told MarketWatch that those tariffs are restructuring the entire lumber global supply chain - incentivizing U.S. buyers to import from overseas rather than ship lumber across the Canadian border.
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