Canfor announces production cuts in B.C.

Canfor Corp. said Wednesday it will temporarily curtailing operations at all British Columbia dimension mills effective this Monday due to low lumber prices and the high cost of fibre.

The curtailment will reduce Canfor's production output by approximately 100 million board feet, the company said. The curtailment will translate into a week of downtime for all of Canfor's B.C. sawmills and an additional week for its Mackenzie operation.

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Canfor has 13 sawmills in Canada, with total annual capacity of approximately 3.8 billion board feet.

It was the latest in a series of curtailments that Canfor began late last year. West Fraser and Conifex have also made similar moves.

In a report issued last week, Hakan Ekstrom of Seattle-based World Resources International LLC said sawmills across North America saw their profit margins fall substantially during the second half of 2018 after reaching record highs over the second quarter.

"Sawmills in British Columbia have also seen the prices for lumber in the U.S. market come down substantially during the second half of 2018," he said in an email previewing the company's latest edition of Wood Resources Quarterly.

"Despite the weaker lumber market, sawlog prices still increased from the 3Q/18 to the 4Q/18 because of tighter supply and a rise in hauling costs. Sawmills saw their gross margins plunge to unprofitable levels and many companies decided to take market-related downtime in late 2018 and early 2019."

According to Madison's Lumber Reporter, the price of kiln-dried, random length Western Spruce, Pine and Fir stood at US$336 as of April 22, down from US$348 the week before, US$402 the month before and US$556 at the same point a year ago.

Contract talks also remain outstanding at a handful of Canfor sawmills where workers voted against ratifying deals that had been tentatively reached with the United Steelworkers.

Canfor's annual general meeting is set for May 1 in Vancouver.

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