Canada's Softwood Lumber Industry Braces for Next Rough Ride Ahead

SEATTLE (Scrap Monster): According to Forest Economic Advisors (FEA) Canada, the country’s lumber industry is passing through an extremely struggling phase. It identifies trade disputes and climatic change as the two key challenges faced by the industry. As a result, many lumber mills in the B.C region have either announced temporary production curtailments or permanent closure of mills.

Russ Taylor, managing director at FEA Canada noted that the escalated log cots in B.C were partially offset last year by record high lumber prices. However, the fall in lumber prices which started last fall has led to temporary mill shutdown in the province. The prices have failed to recover since then, leading to series of production curtailments. All major lumber producers including Interfor, Canfor, West Fraser and Tolko have announced multiple production cutbacks at their B.C. facilities. These cutbacks are likely to reduce annual North American lumber production by at least 500 million board feet.

The wildfires caused by climate change have led to recent closure of nearby mills by Norbord Inc. and Tolko. The dramatic drop in raw log supplies is likely to lead to closure of at least 12 mills in the B.C. region over the next decade or so. The proposed hike in log fees effective July this year is likely to add further pressure to the lumber industry. Also, the industry continues to be impacted by U.S. softwood tariffs, FEA Canada noted.