The curtailments will remove 500 million square feet of annual OSB capacity and 225 million board feet of southern yellow pine lumber capacity, with impairment charges expected to reach US$200 million\u2013220 million.<\/p>\n
West Fraser will indefinitely curtail its Huguley OSB mill in Lanett, Alabama, and its Leola sawmill in Arkansas as weak construction demand and rising operating costs prompt further cuts to production in the US South.<\/p>\n
Both mills are expected to wind down during the fourth quarter of 2026. The company will remove 500 million square feet of annual OSB capacity, measured on a 3\/8-inch basis, and 225 million board feet of southern yellow pine lumber capacity. It expects to record asset impairments of US$200 million\u2013220 million in the fourth quarter, separate from its US$80 million third-quarter net loss.<\/p>\n
President and chief executive Sean McLaren said housing affordability continued to restrict wood products demand, while higher energy-related input costs added pressure on operations. West Fraser had responded by adjusting mill production to orders, reducing inventories and controlling costs, but management saw no near-term improvement in demand sufficient to avoid the curtailments.<\/p>\n
Lower sales and weaker panel earnings<\/strong><\/p>\n Third-quarter sales fell to US$1.363 billion from US$1.434 billion in the preceding quarter. The net loss widened from US$61 million to US$80 million, while adjusted EBITDA declined to US$38 million from US$59 million.<\/p>\n The lumber division generated adjusted EBITDA of US$34 million, including a favourable US$12 million duties adjustment. North American engineered wood products recorded negative adjusted EBITDA of US$4 million, while the European division contributed positive US$4 million.<\/p>\n The curtailments follow the wind-down of West Fraser\u2019s High Level OSB mill in Alberta, completed in the second quarter. The company now expects North American OSB shipments to finish at the lower end of its 2026 guidance of 5.9 billion\u20136.3 billion square feet. SPF and southern yellow pine lumber shipments are also expected at the lower end of their respective guidance ranges.<\/p>\n European OSB shipment guidance remains unchanged at 1.0 billion\u20131.25 billion square feet.<\/p>\n Higher costs reach log procurement<\/strong><\/p>\n Diesel inflation has added approximately US$15 per thousand board feet to West Fraser\u2019s SPF and southern yellow pine lumber costs since the beginning of the year, according to the company. Logging and transport expenses have also increased because of reduced transport labour availability, particularly in the US South.<\/p>\n West Fraser said it had reduced log procurement in some areas in response to higher costs. In OSB production, lower pulpwood prices partly offset the impact of more expensive diesel, while resin and wax costs across its mills rose by approximately US$3 million from the second quarter. Much of the increase in outgoing freight costs has been passed on through customer surcharges.<\/p>\n Lower mill intake also reduces available deliveries for logging contractors. Speaking to GWMI in a separate interview about Southern timber markets, Michael Campbell, president and CEO of the South Carolina Timber Producers Association, explained how production cuts affect suppliers before a facility closes.<\/p>\n \u201cA mill doesn't have to close to affect the market. It can reduce shifts, take downtime or cut its log intake,\u201d Campbell said. \u201cThe mill may still have exactly the same nameplate capacity, but the logger experiences that as fewer loads he is allowed to deliver.\u201d<\/p>\n For contractors displaced by a curtailment, alternative customers may be farther away and already have established suppliers, increasing haul costs while limiting delivery opportunities.<\/p>\n Demand remains constrained<\/strong><\/p>\n West Fraser warned that demand could weaken further if economic activity and employment slow or mortgage rates continue to restrict housing affordability. The company cited September US housing starts at an annualised rate of 1.22 million units and building permits at 1.40 million.<\/p>\n Despite the weaker operating results, available liquidity reached US$1.2 billion at the end of the quarter. West Fraser refinanced an existing US$300 million term loan with a US$500 million facility maturing in September 2029 and repaid US$55 million of operating loans.<\/p>\n Capital expenditure totalled US$212 million in the first nine months. The company maintained its full-year investment forecast of US$300 million\u2013350 million, while reducing production to match current orders.<\/p>","protected":false},"excerpt":{"rendered":" The curtailments will remove 500 million square feet of annual OSB capacity and 225 million board feet of southern yellow pine lumber capacity, with impairment charges expected to reach US$200 million\u2013220 million.<\/p>","protected":false},"author":1,"featured_media":100465,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[4713,5204],"tags":[],"class_list":["post-100464","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-companies-in-the-timber-industry","category-daily-news"],"acf":[],"yoast_head":"\n