By Mark Smith, Partner, FEA
Research by Chari Gimenez, FEA Canada
In last year’s FEA annual survey of the “Top 10” Canadian lumber producers for 2021 in Logging and Sawmilling Journal, the heading read as follows: “A year of record lumber prices across the globe.”
How 12 months can make a difference! Last year proved the old adage: What goes up, must come down! The U.S. index reported by FEA reflects historical changes in a basket of structural lumber grades and is a good representation of North American price changes over time. This index peaked in March and early April but fell throughout the rest of 2022, reaching a floor in December.
Total North American lumber shipments: down 1.8 billion board feet
Total North American softwood lumber shipments were down 1.8 billion board feet (to 58.5 billion board feet from 60.3 billion board feet) in 2022 versus 2021. All of the overall decline seen in 2022 was from Canada, with shipments down 2.2 billion board feet—a whopping 9.4 per cent drop.
In contrast, U.S. lumber shipments actually rose slightly—up 0.5 billion board feet or +0.2 per cent.
Much of the year-over-year decline in lumber shipments from Canadian mills can be attributed to curtailments in B.C. at the end of 2022. With its tight timber and labour markets, B.C. costs are currently among the highest in North America. Further, B.C. timber costs can be more volatile than elsewhere on the continent. B.C. stumpage prices are based on a formula that considers several factors, including lumber prices from three to six months prior. When prices spike and then crash (as we saw several times during the pandemic), mills can find themselves paying very high stumpage even after lumber prices have dropped. With lumber prices plunging in 22Q4, several B.C. mills had to shut down.
Several permanent sawmill closures were announced in January 2023. With B.C.’s AAC set to decline still further due to the mountain pine beetle epidemic and conservation set-asides, more mill closures and shift reductions are likely.
Canadian Top 10 lumber producers: shipments down 1.2 per cent from 2021 to 2022
The Canadian Top 10 lumber producers saw shipments decline by 1.2 per cent in 2022, yet total Canadian shipments decreased by 9.4 per cent in a reflection of the greater resilience of the Top 10 firms.
This saw the Top 10’s share of total shipments rise from 58.9 per cent in 2021 to 64.2 per cent in 2022.
The 2022 production of the Top 10 totaled 13.4 billion board feet, down slightly from 13.6 billion board feet in 2021. Overall Canadian shipments, which had reached 23.1 billion board feet in 2021, were down to 20.9 billion board feet in 2022.
The top three Canadian firms—West Fraser, Canfor, and Resolute—did not change rankings from 2021 to 2022. Collectively, these top three firms accounted for almost 7 billion board feet (33 per cent) of total Canadian lumber output last year, similar to their market share in 2021.
West Fraser remained in top spot despite its Canadian output being down by 547 million board feet (-17.2 per cent) across its 12 mills. Canfor stayed in second at 2.3 billion board feet, also recording a reduction (-7.3%) from 2021 across its 11 Western Canadian mills.
Resolute continued at #3, with output at its 14 mills up 108 million board feet (+5.7 per cent) from 2021 to 2022. Spot #4 was claimed by Interfor following its acquisition of EACOM that gave it a massive 83.4 per cent increase in 2022 shipments—equal to 622 million board feet—versus 2021. Tolko, at #5 for 2022, saw its output decrease by 140 million board feet (-10.6 per cent) to less than 1.2 billion board feet. Finally, J.D. Irving, at #6, recorded 2022 production identical to 2021.
The four largest North American softwood lumber producers (West Fraser, Weyerhaeuser, Canfor, and Interfor) have operations in both the U.S. and Canada. They produced a collective 17.87 billion board feet last year, equating to just under 31 per cent of total North American lumber output in 2022 across their combined 105 sawmills.
Forest Economic Advisors LLC (FEA, www.getfea.com) is an economic forecasting and consulting firm that focuses on the global wood products and timber industries. Founded in 2009, FEA uses modern econometric techniques and deep institutional knowledge of the forest products industry to produce timely, actionable and insightful analysis for stakeholders in the global wood products and timber sectors. The company has methodically built up a large (and ever-expanding) industry data set and extensive industry contacts which it combines with its proprietary modeling systems to deliver comprehensive and consistent forecasts.
On the Cover:
Jordie Wiens believes that his reading of today’s forest industry will strike a chord of potential with forest companies and logging contractors in British Columbia. He’s introducing a small—but proven—forwarder and a harvesting head honed by experience into the B.C. market. Read all about the equipment beginning on page 8 of this issue (Cover photo courtesy of Jordie Wiens).
Piloting a move to improve log quality
A pilot project now underway in B.C. would improve a log’s quality and grade—and help a regional forest industry meet a raft of major challenges.
A small, but proven, step forward for harvesting…
B.C.’s Jordie Wiens is introducing some new Scandinavian logging equipment, believing the timing is right for this small—but proven—forwarder, and harvester head.
Canada’s Top Lumber Producers!
Logging and Sawmilling Journal’s authoritative listing of Canada’s Top Lumber Producers, produced in association with leading forest industry consultants FEA, reflects the consolidation that took place in the industry in the last year—but West Fraser and Canfor remain the country’s top lumber producers.
An alternative approach to logging
Freya Logging is demonstrating an alternative logging approach in the B.C. Interior, including on a research project site involving different forest ecosystems.
Official Show Guide!
Logging and Sawmilling Journal is pleased to publish the Official Show Guide for the Canada North Resources Expo, being held May 26 to 27 in Prince George, B.C. The Official Show Guide has it all, from exhibitor listings to a show map to preview coverage of Resources Expo, the premier forest industry show in Canada this year.
BC Saw Filer’s coming up
The B.C. forest industry is facing challenges, with curtailments due to a drop in the lumber market and a shortage of fibre, but there remains a strong need for skilled workers in the industry, including saw filers, a topic sure to be discussed at the BC Saw Filer’s Convention being held May 26 to 27 in Kamloops, B.C.
Interior Logging Association gears up for show
B.C.’s Interior Logging Association is preparing for another successful show May 4 to 6 in Kamloops, with a broad variety of equipment to be on display at the PowWow Grounds, in Kamloops, B.C.
GP’s new Warrenton sawmill ramps up production
Georgia-Pacific is now working with a new state-of-the-art, high production sawmill in Warrenton, Georgia—and the BID Group was a big part of making that happen.
Included in this edition of The Edge, Canada’s leading publication on research in the forest industry, are stories from the Canadian Wood Fibre Centre (CWFC) and FPInnovations.
The Last Word
A transition is underway in Canadian forestry, and it will result in a stronger and more resilient industry, says Tony Kryzanowski.