Skip to main content
//empty //empty
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub

Lumber producers are scaling back their production amid faltering demand and tumbling wood prices as the COVID-19 pandemic delays home renovations and housing starts.

Benchmark two-by-fours made from western spruce, pine and fir sold last week for US$310 for 1,000 board feet, down 24 per cent since mid-March, according to industry newsletter Madison’s Lumber Reporter.​

West Fraser Timber Co. Ltd., Canada’s largest lumber producer, is reducing production in April by up to 60 per cent in British Columbia and Alberta while other forestry companies are cutting back their output in a wide range of North American markets.

Story continues below advertisement

Vancouver-based West Fraser is decreasing production of lumber made from spruce, pine and fir at its Western Canadian operations, and curtailing output at its U.S. mills that use southern yellow pine.

RBC Dominion Securities Inc. analyst Paul Quinn estimates that West Fraser’s production capacity in March and April will end up being slashed by almost two-thirds in North America in response to the impact of the pandemic.

Mr. Quinn said producers throughout the forestry industry have reduced North American lumber capacity by at least 22 per cent, based on public announcements.

West Fraser released a statement late on Friday, adding to an array of announcements in the industry over the past three weeks. Canfor Corp., Canada’s second-largest lumber producer, cut its Canadian lumber production by 40 per cent, starting on March 30 for a three-week period. Vancouver-based Canfor is also curtailing output at its mills in the United States and Sweden.

B.C. billionaire Jim Pattison owns nearly 51 per cent of Canfor and 11.5 per cent of West Fraser. In December, minority shareholders in Canfor rejected Mr. Pattison’s bid of $16 a share in cash to acquire Canfor stock that he doesn’t already own.

Share prices in Canfor and West Fraser rallied during the upswing on the Toronto Stock Exchange on Monday, but they remain well below their highs in the past year. Canfor closed at $7.27 on Monday, down from its 52-week high of $15.99 in November, while West Fraser closed at $27.08, compared with its 52-week high of $70.46 in May.

Asia in general and China in particular have been considered high-growth markets for B.C. lumber producers, but lofty export expectations were scaled back even before the COVID-19 crisis.

Story continues below advertisement

Slowdowns in U.S. residential construction and renovation projects are expected to continue well into 2020. “We suspect a meaningful recovery in wood-products equities is several months away, given the risks posed by the coronavirus to U.S. housing,” CIBC World Markets Inc. analyst Hamir Patel said in a research note.

Mr. Patel said builders are expected to run into challenges with securing construction permits and scheduling inspectors over the next several months, given that many municipal offices now have limited services.

Compared with a record high of US$622 for 1,000 board feet for western spruce, pine and fir in June, 2018, the forestry industry has watched lumber prices decline by half in less than two years.

Keta Kosman, publisher of Vancouver-based Madison’s Lumber Reporter, said many wholesalers are not replenishing their wood inventories. Producers have been dealing with cancelled orders, as well as disruptions to the transportation supply chain, notably shipments by truck and rail.

The COVID-19 pandemic hit the lumber sector as it was poised for a recovery. “The market was just taking off before March, with U.S. home building going strong and showing ongoing positive trajectory,” Ms. Kosman said.

On the trade front, the long-running softwood dispute lingers between Canada and the United States.

Story continues below advertisement

The U.S. Department of Commerce recently began investigating what it views as log export restraints in Alberta, Ontario, Quebec and New Brunswick. The Commerce Department had previously singled out British Columbia for allegedly imposing unfair restrictions on “the ability of log suppliers to enter into long-term contracts with foreign purchasers.”

The latest move comes after a surprise decision in February by the Commerce Department to lower tariffs in August on most Canadian lumber sold south of the border, after it reviewed anti-dumping and countervailing duties applicable for 2017 and 2018. The Commerce Department pegged the revised anti-dumping and countervailing rate at 8.21 per cent against most Canadian producers, down from 20.23 per cent levied more than two years ago.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies