March 2005 - The Logging and Sawmilling Journal
Canada's Top 30 Softwood Lumber Producers - 2004
Canada’s largest softwood lumber producers are consolidating and clearly dominate this year’s list of the top 30 lumber producers.
By Russell E Taylor
The ninth annual survey of Canadian softwood lumber production and trends has confirmed once again that the larger companies have posted further production gains and continue to dominate the commodity lumber industry. While most companies increased output as they chased record level lumber demand, others added capacity, built new mills or acquired other companies. In 2004, consolidation in the Canadian industry was one of the biggest stories as the larger Western Canadian companies staked bigger claims in the North American market. Eastern Canadian mills didn’t fare as well as their western counterparts, as some regions battled tight wood supplies and tougher operating conditions. While US companies were busy divesting timberlands, their sawmills also posted some very respectable production gains in 2004, especially in the Pacific Northwest.
The annual lists of the top 30 Canadian softwood lumber producers are researched and compiled by R E Taylor & Associates Ltd and WOOD Markets Monthly, and is published jointly by WOOD Markets Monthly newsletter and Logging & Sawmilling Journal. Based on data for the first eleven months of 2004, Canada’s lumber output was up a whopping 7.6 per cent (+2.3 billion board feet) while exports to the US increased by 8.7 per cent (+1.57 billion board feet) to feed the eight per cent increase in US consumption. The top 10 Canadian companies added 1.55 billion board feet (+9 per cent) to their size, and now represent 50 per cent of all Canadian lumber output. Western Canada sawmills increased production by nine per cent in 2004 compared to 2003.
More BC Interior mills operated three shifts to take advantage of the increasing supply of mountain beetle-attacked timber—a problem that is so massive that new state-of-the-art expansions and complete new sawmills are being constructed to deal with this surplus of dead and dying timber. Even Coastal BC posted output gains (+5 per cent)—a result of strong Japanese and US markets. Production in Eastern Canada surged in Quebec (+8.6 per cent) and Atlantic Canada (+7.7 per cent) while Ontario’s output dropped by 2.4 per cent. US export duties were non-issues for most of the year as high US prices allowed Canadian mills that could get wood to keep on producing and shipping.
The appreciation of the Canadian dollar versus the US dollar raised the floor price for Canadian mills’ new break-even point, but record setting prices allowed companies to delay confronting the longer term implications of this serious cost issue. Three major acquisitions changed the lumber dynamics in Western Canada: Canfor’s purchase of Slocan; West Fraser’s purchase of Weldwood; and Tolko’s acquisition of Riverside (and Lignum). The other notable acquisition was Vancouver-based Interfor’s purchase of Portland, Oregon-based Crown Pacific—again another signal that BC companies are flexing their muscles. Exiting the list and getting out of the lumber business completely was Norbord (one of the largest producers in the 1980s and 1990s). BC-based Canfor Corporation was Canada’s largest lumber producer in 2004 —for the sixth year in a row.
With its acquisition of Slocan Forest Products at the end of the first quarter of 2004, Canfor’s 4.61 billion board feet of total output in 2004 represented a 1.7 billion board feet increase over 2003. If all of Slocan’s volume was included in 2004, Canfor’s production would have been closer to 5.2 billion board feet. With one divestiture in late 2004 (the sale of the Fort St James mill to Pope & Talbot), further mill expansions are still expected to increase Canfor’s output in 2005. West Fraser secured its number two spot by purchasing Weldwood from International Paper at the close of 2004. West Fraser achieved 2.47 billion board feet at its own 14 mills, and Weldwood will contribute another 1.25 billion board feet in 2005, raising West Fraser’s potential output to 3.7 billion board feet (before its required divestiture of one mill). Abitibi-Consolidated claimed number three spot, with 2.15 billion board feet, by slipping past Weyerhaeuser Canada’s 2.14 billion board feet. With its acquisition of Riverside (and Lignum), Tolko is technically sitting in fifth spot with a combined volume of 2.07 billion board feet.
Rounding out the billion board foot companies were Tembec (1.54 billion board feet), Buchanan Lumber (1.1 billion board feet), and Domtar (just shy at 988 million board feet). In 2003 and 2004, there were nine Canadian companies producing over one billion board feet of lumber, with Riverside/Lignum entering the list in 2004 (and then being acquired by Tolko) and Slocan (now in Canfor’s production) leaving the list (Weldwood will leave the list in 2005 and be counted as West Fraser production). Comparing year-over-year rankings, the order of the top ten Canadian producers has changed significantly in the top 10 while those companies ranked 11 through 30 have changed little. The top 30 lumber producers accounted for 25.8 billion board feet (70 per cent) of Canada’s total production of approximately 37 billion board feet in 2004. North America’s lumber acquisition action in 2004 was definitely in and around BC as a result of the industry’s four major transactions.
The year 2004 was certainly significant for Western Canada’ sawmilling sector and the prospects of some additional (but smaller) acquisitions is expected for 2005. In 2005, timber supply issues (reductions in Ontario and Quebec and increases in BC from mountain pine beetle-attacked timber) will provide opportunities and constraints—as will the question on the likelihood of a settlement on duties (but don’t bet on this one).
Russell E Taylor is president of R E Taylor & Associates Ltd & International Wood Markets Research Inc, Publishers of WOOD Markets Monthly newsletter, in Vancouver, BC. Phone: 604-801-5996; e-mail: email@example.com; www.woodmarkets.com.
Canada's Top 30 Softwood Lumber Producers - 2004
Notes: Includes lumber produced only at primary sawmills and excludes US production
1 Estimate 2 Includes JV volumes 3 Includes 4 Sold in 2004
Source: WOOD Markets
This page and all contents
©1996-2007 Logging and Sawmilling
Journal (L&S J) and TimberWest Journal.
last modified on
Sunday, April 24, 2005