Lumber prices hit lowest level in last 10 years
Copyright 2000 The Prince George Citizen
December 27, 2000
By GORDON HOEKSTRA
Lumber prices fell this week to their lowest level in a decade, and Northern Interior producers are hoping desperately they'll climb in the new year. But industry consultant Charles Widman warns that unless Canadian lumber producers look seriously at curtailing more production, prices in the new year could fall even further.
Widman's Market Barometer pegs a thousand board feet of random length two-by-fours -- considered the industry bellwether -- at $180 US last week, well down from the price last year at this time of $325 US. and its lowest since 1991. The break-even point for Northern Interior mills is considered $280 US, although that can vary significantly from mill to mill.
Prices have slipped again in December from a small upswing the month before because severe winter storms throughout much of the U.S. midwest, northwest and even into the south have brought construction to a halt, explained Widman.
But the main reason prices have plummeted this year is linked directly to a glut of lumber in the market as the U.S. economy began to cool, he said.
While lumber manufacturers like Canfor, Slocan, West Fraser and Eastern producers have taken temporary sawmill closures, it hasn't been enough, said Widman. Many local companies have taken one-week shutdowns during Christmas, a traditional time for closures.
``If big mills in the North come back on line with normal production levels in the new year, prices could go to $150,'' said Widman. ``It's not a pretty scene.''
West Fraser Timber is taking a week of downtime between Christmas and New Year's, added to some downtime its taken previously in the year. But if the price of lumber remains at these levels in the new year, the company will have to look at curtailments again, said West Fraser official Ernie Thony from Quesnel. ``The Grinch has landed,'' he said. ``It's not fun at all. These are unprecedented prices.''
Thony said, however, that West Fraser will continue to do everything possible on behalf of its employees and communities to keep mills operating. West Fraser has mills in Quesnel, Chetwynd, Houston, Burns Lake, Fraser Lake, Terrace and Williams Lake.
Integrated companies like West Fraser, which also runs pulp mills in Quesnel and Kitimat, have been helped by buoyant pulp prices in 2000 and the fact its sawmills provide chips for pulp. But the glow is starting to come off the pulp market as well, said Thony.