Sawmills in British Columbia struggle with logs supply shortage and high prices

November 26, 2018
Source:
SAO/Fordaq
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Many sawmills in British Columbia have shut down or laid off the majority of their employees. This comes as a result of reduced log supply, high log prices and a steep drop in lumber prices.

As forest industry executives in Canada stated, the prices for lumber got to a record of $650/1,000 board feet, especially due to the increasing US housing demand this year, Salmon Arm Observer (SAO) news daily reports.

Producers in British Columbia piled up lumber due to a shortage of rail cars, partly caused by increased oil-by-rail shipments. That lumber inventory glut got moving as other producers switched from Asia to the U.S. for the high prices, and then the price fell below $300, said Susan Yurkovich, CEO of the B.C. umbrella group Council of Forest Industries, as SAO reported.

 “We’re looking for some price improvement,” Yurkovich said. “We’ve seen it improve a little bit over the last number of weeks, but that doesn’t change the fundamental issue around availability of fibre, in the Interior in particular, and the high fibre costs across the province.”

This log shortage in BC is the result of a 15-year decline caused by the mountain pine beetle epidemic in the interior of the province. Also, the layoffs are caused by the abnormally high salvage logging. The forest fires interrupted the logging, but but 2.4 million cubic metres of fire salvage timber were approved this summer for sawmills, as Forests Minister Doug Donaldson said, as quoted by SAO.

 “We’re working with the community transition action team to identify skills training that could occur,” Donaldson said. “We want to try to keep people in their communities if they desire, and find jobs that are there.”

As reported by SAO, the province has increased land recovery spending by $22 million over three years, and that means “boots on the ground for reforestation,” Donaldson added.

Quesnel was affected, after Tolko Industries closed one its sawmills there in October, a thing which led to the layoff of 100 jobs. Also, West Fraser Timber announced that it would end its third shift at its Quesnel and Fraser Lake sawmills, with more than 100 layoffs.

Conifex began a shutdown of its Fort St. James mill on Nov. 12, saying it will last at least four weeks. Moreover, Interfor announced in October it is reducing production by about 20 per cent for the fourth quarter at its mills in the B.C. Interior, with reduced operating days and extended weekend and holiday breaks. Interfor has mills at Grand Forks, Castlegar and Chase, SAO reported.

On November 1st, Canfor Corp. announced that is curtailing its B.C. mill operations by about 10% during the Q4/2018. Canfor president Don Kayne said the decision is a result of “log supply challenges following another difficult wildfire season, uncompetitive log costs and declining lumber prices.”

In December, Yurkovich and Donaldson are joining B.C.’s annual forest industry trade mission to Asia, and Donaldson said the focus will not be only on increasing Asia lumber trade, but selling more sophisticated wood products than lumber.