b.c. lumber sector takes another hit from weak markets, low prices
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b.c. lumber producers face potentially steep losses with commodity prices that are falling while punitive softwood lumber duties have risen.
richard lam
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weakening u.s. housing construction has put another dark cloud over b.c.’s forest industry, increasing the likelihood of more mill shutdowns and layoffs.
lumber prices flatlined in recent weeks due to weak demand, just as new, higher duties in the canada-u.s. softwood lumber dispute took effect.
that means b.c. mills are operating at losses of up to us$220 per thousand board feet of two-by-fours, a standard industry measure, according to industry consultant russ taylor.
the trade publication madison’s lumber reporter quoted a price of us$482 a thousand board feet of spruce, pine or fir two-by-fours for the week of sept. 19, down from us$506 a thousand board feet a month ago.
taylor said market conditions during september are typically favourable for sawmills, but they’re decidedly negative this year. his forecast is that they will remain weak for the rest of the year, which will likely result in mills taking downtime.
“we’re seeing it already,” said kim haakstad, ceo of the b.c. council of forest industries. “we’re seeing temporary curtailments, we’re seeing extended holiday breaks, we’re seeing reconfigured shift schedules.
“here on vancouver island, we’ve got a mill that’s closed for the rest of the year,” haakstad said, referring to the western forest products sawmill at chemainus.
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the mill was shuttered in june, putting 150 employees out of work. on monday, the company announced it will keep the mill closed until the end of the year and shorten hours at its remaining operations to trim its output by six per cent.
the company cited “persistently weak market conditions,” on top of increased u.s. lumber duties and “a lack of available economic log supply.”
interfor corp. had previously announced it will pare its output by 12 per cent through reduced operating hours, extended holiday breaks and maintenance shutdowns across all of its operations in canada and the u.s.
the production cuts are coming just after the u.s. department of commerce’s latest decision on penalties in the softwood lumber dispute that doubled the average combined countervailing and anti-dumping duties to 35.19 per cent.
forests minister ravi parmar announced changeson wednesday to the province’s b.c. timber sales agency aimed at improving conditions for the forest sector by making it easier for smaller mills to get timber.
parmar earlier this year commissioned a review of b.c. timber sales by an expert panel, which came back with 54 recommendations to improve operations at the agency that manages 20 per cent of the province’s timber harvest. key recommendations included expanding community forests around the interior municipalities of vanderhoof, fort st. james and fraser lake, which would allow them to protect trees and ensure a stable supply of logs to local mills.
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other recommendations included making it easier for smaller companies to bid on timber auctions, developing new products to use more parts of trees, such as treetops and limbs, and building partnerships with first nations.
parmar said he wants to implement the changes as quickly as possible, but some will require legislative changes.
haakstad said parmar’s recognition of the urgency for change was encouraging, but her organization has ideas for other measures outside of b.c. timber sales that should also be fast-tracked.
the province’s system for issuing cutting permits needs to be streamlined, haakstad said, which has long been a complaint of her council.
haakstad said it can take two to three years for forest companies to get permits to harvest timber that has been allocated to them, which makes it difficult to direct consistent supplies to mills, especially during difficult market conditions.
“when you don’t have access to logs, there are no options,” haakstad said. “if you have access to logs, you have options to keep those facilities running.
“unfortunately, we already have a number of them (mills) that are at one shift instead of two, or two shifts instead of three, and not running at full capacity,” she added. “we’re starting to get to a point where it will be very hard to look at temporary reductions in operations.”
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