Executive Briefings

Forest Fires Drive Up Timber Prices

Wildfires in Canada have forced the shutdown of several sawmills, resulting in a hike in timber prices and further pressure on an industry already hit by U.S. duties.

Speaking exclusively to SM, Hakan Ekstrom, president of analysts Wood Resources International, said shutdowns due to forest fires were expected by the industry, but the closures had come at an inopportune time for the North American market.

He said buyers within the system had already been wary about building up inventories after the U.S. announced plans to introduce duties of up to 24 percent on lumber exports from Canada in May.

On top of the uncertainty created by the new duties, British Colombia’s wildfire crisis took hold just as Quebec’s forest sector began its annual two-week summer shutdown.

“So what we have right now is a pretty tenuous supply-demand balance,” he said. “If we get actual fires at mills and they lose lumber inventory, that’s going to be a huge problem.”

The wildfires have swept across the western U.S. and Canada, forcing thousands of evacuations across California, Colorado and British Colombia.

British Colombia said it had declared its own state of emergency — its first in 14 years — as over 200 fires were burning across the province and more than 10,000 people had been evacuated.

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Speaking exclusively to SM, Hakan Ekstrom, president of analysts Wood Resources International, said shutdowns due to forest fires were expected by the industry, but the closures had come at an inopportune time for the North American market.

He said buyers within the system had already been wary about building up inventories after the U.S. announced plans to introduce duties of up to 24 percent on lumber exports from Canada in May.

On top of the uncertainty created by the new duties, British Colombia’s wildfire crisis took hold just as Quebec’s forest sector began its annual two-week summer shutdown.

“So what we have right now is a pretty tenuous supply-demand balance,” he said. “If we get actual fires at mills and they lose lumber inventory, that’s going to be a huge problem.”

The wildfires have swept across the western U.S. and Canada, forcing thousands of evacuations across California, Colorado and British Colombia.

British Colombia said it had declared its own state of emergency — its first in 14 years — as over 200 fires were burning across the province and more than 10,000 people had been evacuated.

Read Full Article