At least one forestry company in B.C. plans to take some down time at one of its sawmills, due to falling lumber prices.
Conifex Timber (TSX:CFF) plans to take a two-week curtailment at its sawmill in Mackenzie, and cites high operating costs and falling lumber prices as the reason for the curtailment.
“A combination of record high delivered log costs and the unprecedented collapse in lumber prices has necessitated a temporary curtailment for two weeks,” Conifex CEO Ken Shields said in an August 20 news release. “We regret the impact this may have on our employees, their families and the community.”
North American lumber prices are still above historical averages. It’s just that they have fallen from all-time records since May.
North American lumber prices hit all-time highs of more than US$1,600 per thousand board feet in May, driven by a mismatch in demand and production, but have since fallen to about US$500 per thousand board feet.
That’s still above the 10-year average of about US$350 per thousand board feet. But B.C. producers face some of the highest operating costs in North America, according to the Council of Forest Industries (COFI).
Part of the problem in B.C. is an ever shrinking timber supply and high stumpage rates. More permanent sawmill closures are expected in B.C., and some sawmills presumably have only been able to continue operating for the last year or so due to the recent record high lumber prices.
Both Interfor (TSX:IFP) and Canfor Corp. (TSX:CFP) also announced in late July they may have to curtail some production, but both cited wildfires and rail transportation interruptions as the main reasons for that.