![\"\"](\"https:\/\/timberindustrynews.com\/wp-content\/uploads\/2025\/09\/lumber99-36-1024x538.jpg\")
<\/p>\n<\/p>\n
North American lumber companies are currently facing a myriad of challenges in the industry, as rising inflation and higher interest rates significantly impact consumer spending in the housing sector. Conifex Timber, Interfor, and Canfor are closely monitoring the situation, expecting the weakest lumber prices seen in years.<\/span><\/p>\n Interfor expects lumber market volatility<\/strong><\/p>\n Interfor anticipates volatility in the near-term North American lumber markets as the economy adjusts to various factors, including inflationary pressures, elevated interest rates, labor shortages, and geopolitical uncertainty. However, over the mid-term, Interfor expects lumber markets to benefit from favorable underlying supply and demand fundamentals. Positive demand factors include the aging U.S. housing stock, a shortage of available housing, and various demographic factors. On the supply side, growth in lumber supply is expected to be limited due to extended capital project completion and ramp-up timelines, labor availability constraints, and limited global fiber availability.<\/p>\n Interfor's strategic approach involves maintaining a diversified portfolio of operations across multiple regions. This strategy allows the company to mitigate risk and maximize returns on capital throughout the business cycle. With a strong balance sheet and significant available liquidity, Interfor is well-positioned to continue pursuing its strategic plans despite ongoing economic and geopolitical uncertainty on a global scale. In the event of a sustained downturn in the lumber market, Interfor has the flexibility to significantly reduce capital expenditures and working capital levels. The company is also prepared to proactively adjust its lumber production to align with the demand in the market.<\/p>\n Canfor eyes weakness in the lumber segment in Q2<\/span><\/strong><\/p>\n Canfor has observed weaknesses in the lumber segment during the second quarter. The adjusted results for this segment decreased by $6.8 million compared to the previous quarter. Although Canfor's European operations and US South operations showed strong earnings, they were offset by challenging results from the Western Canadian operations. The primary driver of the lumber segment results was a moderate decline in most North American benchmark lumber market prices. The average North American Random Lengths Western Spruce\/Pine\/Fir (\"SPF\") 2x4 2&Btr price and the average Southern Yellow Pine (\"SYP\") East 2x6 #2 price both experienced a 6% decrease quarter-over-quarter. However, there was a slight increase in market pricing in Europe, partially offsetting these factors. Additionally, the current quarter saw moderately higher production and shipment volumes across all three lumber operating regions. This increase was primarily due to more operating days in the US South and Europe, as well as reduced temporary downtime in Western Canada (approximately 240 million board feet in the current period compared to 250 million board feet in the previous quarter).<\/p>\n Throughout the first quarter of 2023, the North American lumber market faced pressure. Residential construction activity remained consistent with the previous quarter but was hampered by housing affordability constraints caused by persistent inflationary cost pressures and high interest rates. These challenges in the housing sector led to a decline in most North American US-dollar benchmark lumber prices during the current quarter. Although there was a slight improvement in demand within the repair and remodeling sector, it was outweighed by the ongoing housing sector challenges.<\/p>\n In the first quarter of 2023, offshore lumber demand and pricing in Asian markets, particularly Japan and Korea, continued to weaken due to high inflation and interest rates, along with elevated lumber inventory levels in those regions. In China, despite the introduction of government stimulus measures aimed at reviving the domestic economy, lumber demand and pricing were negatively impacted by high inventory levels.<\/p>\n In Europe, specifically in the United Kingdom, there was a modest improvement in lumber demand and pricing during the first quarter of 2023. This improvement was attributed to a slight increase in residential construction activity and limited supply from Russia and Belarus. These factors outweighed the ongoing weakness in the do-it-yourself sector during the period.<\/p>\n Looking ahead, global lumber market conditions are expected to face ongoing challenges in the second quarter of 2023 due to general economic uncertainty and affordability pressures that will continue to affect demand. However, in the longer term, the underlying global lumber market fundamentals are projected to be solid. This is primarily driven by strong demographic trends, consistent demand resulting from an aging housing stock, and low inventories of new homes. The repair and remodeling sector is anticipated to maintain strong demand in the second quarter of 2023, despite inflationary pressures, due to the aging housing stock and seasonal factors.<\/p>\n In Asia, offshore lumber demand is expected to remain weak in the second quarter of 2023 but improve in the latter half of the year as inventories in the region reach more balanced levels. In Europe, lumber demand is predicted to be solid in the second quarter of 2023, combining modest demand in the residential construction segment with a seasonal uptick in the do-it-yourself sector.<\/p>\n Canfor's results in the second quarter of 2023 will also reflect the impact of the permanent closure of the Chetwynd sawmill and pellet plant, as well as the temporary closure of the Houston sawmill following their wind down in April 2023.<\/p>\n In the US South, Canfor's construction of a greenfield sawmill in DeRidder, Louisiana, is progressing well. The ramp-up in production is expected to commence in the second quarter of 2023 and continue throughout the rest of the year.<\/p>\n Conifex says lumber prices down on inflation, interest rates<\/strong><\/p>\n Conifex Timber says pressure from inflation and higher interest rates are affecting consumer spending when it comes to housing, resulting in the weakest lumber prices seen in years, a situation it expects to persist through the rest of this year.<\/p>\n On the U.S. housing market and prices:<\/p>\n \"While lagging U.S. housing completions and tempered repair and remodeling activity, as well as elevated levels of offshore lumber imports have affected market demand for lumber products, demand and market prices are expected to see a gradual increase in the second half of 2023.\"<\/p>\n Outlook for lumber prices in the second half:<\/p>\n \"We expect lumber markets to continue to experience weakness through 2023 as global market conditions continue to evolve,\" the company said.<\/p>\n Outlook for the Mackenzie sawmill:<\/p>\n \"We expect to see an increase in lumber production over 2022, with the expectation of achieving annualized operating rates of approximately 85% for the remaining nine months of 2023 on improved sawmill operating rates,\" the company said.<\/p>\n \"We anticipate an improvement in operating costs in 2023 as a result of decreased unit fixed costs on higher lumber production volumes and availability of sufficient logs for continuous operations at our sawmill. We are optimistic that we will realize a high volume of lumber shipments in 2023 that matches our sawmill production as the transportation challenges faced in 2022 have largely been resolved.\"<\/p>\n Outlook for production following new annual allowable cut determination:<\/p>\n \"The new AAC for the Mackenzie TSA is below the current AAC and the base case harvest projection released in July 2022. However, the actual harvest within the Mackenzie TSA over the past 20 years averaged 2.5 million cubic metres per year, which is in line with the current AAC determination,\" the company said.<\/p>\n \"Further, the abolition of a biological or salvage partition means our harvest will be directed entirely at a 'green' timber profile. The chief forester has also set a maximum of 1.17 million cubic meters that may be harvested in the southwestern area of the Mackenzie TSA (the area that is west of Williston Reservoir and south of Omineca Provincial Park and Omineca Arm). We believe the specified partition should assist the economic sustainability of our lumber manufacturing and power plant operations.\"<\/p>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":" North American lumber companies are currently facing a myriad of challenges in the industry, as rising inflation and higher interest rates significantly impact consumer spending in the housing sector. Conifex Timber, Interfor, and Canfor are closely monitoring the situation, expecting … Continue reading \n\n