Northern BC Business Logo

Canfor extends curtailments at B.C. sawmills – Prince George Citizen

, ,

Canfor Corporation said Tuesday it is extending production curtailments at “select” B.C. sawmills for a further two weeks.

The expected restart date for the company’s Prince George Sawmill and its Plateau sawmill in Vanderhoof is now January 30 and for its Chetwynd and Houston operations, January 23.

Four-week curtailments for Prince George Sawmill and Plateau sawmill in Vanderhoof had beeninvoked starting December 19 while the Polar operation at Bear Lake was subjected to a three-week curtailment.

A four-week curtailment at Canfor’s Intercontinental Pulp Mill was subsequently imposed due to the lack of available economic fibre as a result of sawmill curtailments.

In a statement, the company cited “ongoing weak market conditions and the lack of available economic fibre” for the most-recent move. 

As of the week ending December 9, the price of western spruce, pine and fir stood at $390 per thousand board feet, according to Madison’s Lumber Reporter. Analysts say $500 is the break even point.

Canfor’s sawmills in Alberta were not included in the extension. 

In December, analyst Russ Taylor noted that Canfor said it anticipates the majority of its B.C. sawmills will operate below full capacity in the new year, indicating its Alberta operations will be back to running at current levels by early 2023 while those in this province will not.

He said that’s a function of the difference in the way stumpage works in the two provinces. Whereas it’s adjusted on a monthly basis in Alberta, it’s updated annually and quarterly in B.C., creating a lag effect.

As a consequence, he said Canfor made “outrageous profit” when the price of lumber was high and stumpage low, only to then endure stumpage that is too high relative to the market. 

However, Taylor doubts the system used in B.C. will be changed anytime soon.

“It’s been this way since 2004 when the whole formula was devised around the U.S. softwood lumber deal,” he said. “This formula is tied to the Americans overseeing our forest policy and our stumpage formula so, no chance.”

The curtailment will reduce production by about 21 million board feet in addition to the 150 million board feet that was part of the previous curtailment.

Canfor “will continue to adjust operating rates to align with market conditions and the available supply of economically viable timber,” the company said in the statement.

Share this article: