Several Closures of B.C. Sawmills Predicted for 2023

 It’s no secret that 2022 was a great year for resource companies across Western Canada. When these companies thrive, so does the provincial and federal government. However, it appears that all of that is set to change in 2023. Alberta oil and gas manufacturers made impressive profits on high oil and natural gas prices last year. B.C. forestry majors made record-breaking profits on profitable lumber prices in 2022 as well. However, with policies set in place by the federal and provincial governments, growth within the sawmill sector in Western Canada has become stalled.

The lumber sector is one of the most valuable exports for B.C. With the growth in this sector being hindered, there will likely be a significant loss of opportunities for a number of Canadian corporations. A price correction is predicted for the earlier part of 2023 as Goldman Sachs is still hellbent on rising share prices for commodities in the new year. However, a crucial lack of supply is likely to increase prices up to CAD$14,822 per tonne by the end of the year according to Goldman Sachs.

As of October 2022, the value of lumber exports from B.C. has risen 25% to $56 billion compared with $45 billion during the same period in 2021, according to B.C. statistics.

In addition, higher borrowing rates are expected to hinder home construction across Canada and America. B.C. is set to become the first lumber-producing region in North America to curtail production when the price of lumber dipped.

The break-even price for most B.C. sawmills is CAD$606 to $673 per thousand board feet according to Russ Taylor, president of Russ Taylor Global Wood Business and Market Consulting. There are several companies that have already taken temporary reductions at B.C. sawmills including Canfor Corp., Aspen Planers, Western Forest Products, and Conifex. Canfor Corp, put a pause on all of its sawmills in B.C. and Alberta in December for around four weeks. Aspen Planers idled operations in Merrit in mid-December, while Western Forest Products and Confix also announced temporary cutbacks.

Due to the regulatory barriers the B.C. government placed on logging, Taylor anticipates two or three more temporary curtailments may become permanent this year. Taylor said that “There are going to be a few more [permanent] curtailments because of all this endless government policy. Primarily it’s going to be the old-growth deferrals, all the caribou habitat protection that they have to still implement, they have all these tenure transfers … and then they’re introducing core landscape planning. Now there’s a commitment by the government to preserve 30 percent of B.C. forests by 2030, up from 15 percent currently. And on and on it goes.”

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