Permanent and indefinite sawmill curtailments swell in 2019: Where does it end?

What a difference a year can make. After seeing lumber prices soar to record highs in 2018 as demand in the first half of the year held solid across all end-use markets and supply was disrupted by severe rail delays from Western Canada, prices have now crashed to cash costs for many producers in British Columbia (BC) and the US Pacific Northwest (PNW). A sluggish housing market paired with an upsurge of capacity growth in the US South has created a significant supply imbalance that has contributed to the sluggish pricing environment we have seen in 2019, and ultimately spurred the string of curtailments realized in the region thus far this year.

Based on our tally, over 2.5 BBF of sawmilling capacity in BC and the PNW is either permanently or indefinitely slated to be removed from the market in 2019. This tally excludes temporary curtailments in 2019, which have also been sizeable; temporary curtailments announced to date will pull an additional 700 MMBF from the market in 2019. The actual figure is almost certainly higher when factoring in unannounced curtailments, which market participants report have been pervasive. This also excludes a strike at a major producer's operations in British Columbia that has been ongoing for several months now, which has also pulled production from the market.

I have a full article and downloadable infographic on Fastmarkets RISI’s Market Insights page. Feel free to check it out!

Read my full article on Market Insights by Fastmarkets RISI.

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