Quebec Sawmills End Up in Losses, As Lumber Demand Dips

The lumber prices had hit levels as high as $1,500 US per thousand board feet during the time of the pandemic.

SEATTLE (Scrap Monster): According to Jean-François Champoux, CEO, Scierie Saint-Michel Inc., the company’s sawmill in the Quebec region had recently started operating at full capacity, but at a loss. In fact, the entire forestry sector has been operating at a loss since the previous year, mainly on account of the significant dip in lumber demand over this period, he said.

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The lumber prices had hit levels as high as $1,500 US per thousand board feet during the time of the pandemic. However, it witnessed steady decline in 2022 as well as 2023. The lumber is currently priced at $575 per thousand board feet, down significantly from its peak. The weak prices had forced some sawmills to go ahead with temporary production curtailments in order to limit deficits.

The profitability of sawmills are directly linked to housing starts, which in turn is dependent on interest rates. The interest rates in the country have almost tripled over the past two years. Consequently, the housing starts in Quebec have declined sharply by almost one-third.

Meantime, the anticipated lower interest rates in 2024 should provide big boost to housing starts, thus leading to robust lumber demand. Champoux predicts recovery in lumber markets during the current year.

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