Canadian Lumber Production Continues to Fall

by | Apr 25, 2024 | 2024, Industry News, Logging & Sawmilling Journal, March/April 2024

By Mark Smith, Partner, FEA; Research by Chari Gimenez, FEA Canada

In 2022, we saw total Canadian softwood lumber shipments drop by almost 2.2 billion board feet, a 9.4 percent decrease over 2021 total Canadian shipments. This trend has continued through 2023 with total Canadian lumber shipments dropping from 20.9 billion board feet in 2022 to 19.8 billion board feet in 2023, a further loss of 1.1 billion board feet. This means a combined loss of lumber supply for the two years of 2022 and 2023 equal to 3.3 billion board feet.

Last year in March 2023, FEA had noted that:

• Softwood lumber usage was expected to decline still further in 2023, with residential construction, residential improvement, and industrial use all taking a hit as the economy slows. However, the fundamentals underlying softwood lumber’s main end-use markets remain strong, and markets are expected to recover in 2024.

This has subsequently proven to be the case. North American softwood lumber demand is driven by U.S. consumption, which has remained sluggish as rising home prices and interest rates have created enough uncertainty in the market to restrain demand. Nonetheless, FEA expects the U.S. housing sector will recover to some extent in 2024 due to favourable demographics, particularly the age-class distribution, and the accumulation of underbuilding. American and Canadian markets are forecasted to grow by two per cent and five per cent respectively due to this housing demand.

Total North American lumber shipments: down 1.4 billion board feet in 2023

Total North American softwood lumber shipments were down by 1.4 billion board feet in 2023 (57.2 billion board feet) as compared to 2022 (58.6 billion board feet) reflecting the ongoing, weak demand noted above. A similar decline was seen last year for the period from 2022 to 2021 with volumes decreasing by 1.8 billion board feet for that year. This means that over the last two years, shipment volumes have decreased by 3.2 billion board feet from North American mills, versus the volumes seen in 2021.

Looking at the figures in the introductory paragraph for total Canadian shipments (down 3.3 billion board feet through 2022 and 2023), we can see that all the North American decline can be attributed to shipments from Canadian mills. Over this same two-year period, U.S. mills have actually shown a small increase (about +0.1 billion board feet).

Canadian Top 10: Shipments up by 0.2 per cent from 2022 to 2023

The Canadian Top 10 lumber producers saw shipments increase marginally by 0.2 per cent in 2023, despite total Canadian shipments decreasing by -5.3 per cent. In absolute numbers, the Canadian Top 10 lumber producers saw shipments grow by 31 million board feet whereas total shipments across all Canadian producers dropped by 1,110 million board feet. This clearly reflects the resilience of the Top 10 firms, whose market share in Canada increased from 64.2 per cent in 2022 to 68.2 per cent in 2023.

The Top 10 production in 2023 was 13.482 billion board feet as compared to 13.451 billion board feet in 2022. Total Canadian shipments were 20.937 billion board feet in 2022, dropping to 19.827 billion board feet in 2023.

The Canadian Top 10 companies saw no new entrants in 2023 with the same 10 companies present as in the 2022 Top 10 list, albeit with some minor change of places. This included J.D. Irving and Tolko switching places at #5 and #6, as well as Weyerhaeuser and Dunkley Lumber switching places at #7 and #8.

The top three Canadian producers in 2022—West Fraser, Canfor, Resolute FP—kept the same rankings through 2023. These top three producers accounted for 6.8 billion board feet in 2023 and 34 per cent of all Canadian shipments. This was similar to both 2021 and 2022, where these top three companies also accounted for about one-third of all Canadian shipments, albeit the total volume of shipments was higher.

West Fraser remains in top spot with its Canadian output being up by 52 million board feet (+2.0 per cent) to almost 2.7 billion board feet across its 13 mills. Canfor remained in second spot with just under 2.2 billion board feet, this being a drop of 126 million board feet (-5.4 per cent) across its 13 mills.

Resolute FP remained in third spot with output across 14 mills also dropping, by 109 million board feet (-5.4 per cent). Interfor had 2023 production of 1.6 billion board feet, an increase of +19.1 per cent over 2022 production of just under 1.4 billion board feet. J.D. Irving, now at #5, saw its output increase by 62 million board feet (+6.0 per cent) to just under 1.1 billion board feet. Finally, Tolko at #6 saw production volume decrease (-12.3 per cent) to just over 1.0 billion board feet in 2023.

The four largest North American softwood lumber producers (West Fraser, Weyerhaeuser, Canfor and Interfor) have operations in both the U.S. and Canada. Collectively, they produced 18.3 billion board feet, exactly 32 per cent of total North American lumber output in 2023 across their combined 108 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.

Forestnet

Author

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

TimberPro deal fuels forestry expansion for SMS Equipment

TimberPro deal fuels forestry expansion for SMS Equipment Exclusive TimberPro rights granted to SMS Equipment in eight Canadian regions ACHESON, AB:  SMS Equipment and Komatsu announced today a series of agreements granting SMS Equipment exclusive dealer rights for...