Canfor opened its Houston mill yesterday, following a two-week shutdown caused by rail system bottlenecks and other problems in southern B.C. owing to wildfire outbreaks there.
The transportation problems resulted in a backlog of lumber that could not be taken to waiting markets easily and so Canfor closed the mill here and shuttered operations at its other Canadian mills until such time as things cleared up.
Authorities, for instance, had ordered that trains move slower through dry areas to reduce the chances of sparks being created which could then lead to the possibility of fires.
“Houston serves our global customers, including the US and offshore, so the backlog across the rail system and shortage of cars has really impacted our ability to transport product to market,” said Canfor official Rosemary Silva.
Canfor’s other mill along Hwy16, Plateau, which is just west of Vanderhoof, is scheduled to open next Monday, August 16.
In all, the closure of Canfor’s mills resulted in a production loss of 115 million board feet of lumber.
“We continue to actively monitor the ongoing weather-related challenges, particularly with regards to transportation constraints, and remain prepared to take further action as required to ensure minimal disruption to our employees, customers and operations,” said Canfor president and chief executive officer Don Kayne.
While Canfor was dealing with transport problems, it was also releasing April-June financial figures which showed record sales.
The company had $2.5 billion in sales during those three months, enough for operating income of $1.04 billion which was $438.7 million more than the first quarter of 2021.
“Our lumber business generated exceptional financial results in the second quarter, with our solid operational performance enabling us to capitalize on strong global lumber fundamentals resulting in record-high operating earnings,” said Kayne.
“Our pulp business successfully leveraged favourable pulp market conditions and improved productivity to record strong financial results for the quarter.”
But lumber prices have now dropped with Canfor predicting markets to be more challenging for July, August and September as home renovations tail off now that more people are returning to work as COVID-19 restrictions are beginning to lift. A moderation in home building is also expected.
The company did indicate that lumber markets will remain strong in Europe and in Asia.
It is also signalling investor confidence outside of Canada by announcing in June that it will spend approximately (US) $160 million on a new mill in Louisiana.
The mill, near a city called DeRidder, is being subsidized by local governments and the Louisiana state government.
“The facility is anticipated to have an annual production capacity of 250 million board feet, with the ability to produce a wide variety of high-value wood products. Startup of the sawmill is currently anticipated late in the third quarter of 2022,” indicated a Canfor release.
By contrast the Houston mill, when it opened in 2004, had a rated annual capacity of 600 million board feet.