Canada’s softwood lumber industry facing tough conditions as tariffs and climate weigh

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Canada’s softwood lumber industry facing tough conditions as tariffs and climate weigh GlobeBusiness

“It’s not a happy situation right now if you’re in the lumber business,” said Russ Taylor, managing director at Forest Economic Advisors Canada.The impact of high log costs in the province – brought on by a lack of supply from the lingering pine beetle outbreak and back-to-back record wildlife seasons – was tempered last year by record high lumber prices.

BMO analyst Mark Wilde calculates that the combined cuts add up to about 500 million board feet or some 0.8 per cent of North American annual lumber production, which he said is wholly inadequate to deal with the lack of raw log supply and the “very ugly” market. Meanwhile the warmer, drier weather in Western Canada could also be contributing to spruce bark and Douglas-fir beetle infestations, said Taylor, while a wildfire currently burning near High Level, Alta., has forced Norbord Inc. and Tolko to close nearby mills.“It is weather, and everyone’s been blaming weather on and on and on, but it’s still weather...There’s just stuff going on all over the place, a lot of it’s tied to climate change,” he said.

“This will likely result in a faster-than-expected rationalization of the B.C. lumber industry,” he said in a recent note.Taylor estimates that the tariffs, which average about 20 per cent, push mills in B.C. and Quebec from about a break-even point to a negative 15 to 20 per cent loss.Moody’s Investor Service analyst Ed Sustar said the duties are taking a bite now that prices have fallen so much.

“We’re only into this for two years now, it could take another couple of years before another softwood lumber agreement gets signed.”

 

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globebusiness Good.

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