International Forest Products (Interfor) turned in a $100,000 loss in the third quarter of 2013, compared to a net income of $15.8 million at the same time last year, due to falling commodity lumber prices and higher log costs in interior British Columbia.

The Vancouver, B.C.-based company said lumber production in the third quarter hit a record 447 million board feet, a 7% increase over year-ago production, despite a number of weather-related interruptions at its Southern U.S. plants. Lumber sales, including wholesale and agency volumes, also achieved a record 446 million board feet, up 3% from the prior-year quarter.

In the quarter, SPF 2x4 in the U.S. averaged $328, down $7 versus the second quarter. Hem-Fir studs were particularly hard hit, averaging $333, down $40 versus the prior quarter, while SYP 2x4 East was up $1 at $393.

During the third quarter of 2013, Interfor purchased the sawmill operations of Keadle Lumber Enterprises, Thomaston, Ga., for $33.8 million, including working capital.

The U.S. housing market is projected to continue its gradual recovery and lumber prices are expected to remain volatile through the balance of 2013 with some improvement expected in 2014. Export tax rates will decrease to 0% in November as lumber prices in September moved above the relevant benchmark price. 2

“Our mills on the B.C. coast operated at 56% of rated capacity in the third quarter, up from 51% in the second quarter,” Steven Hofer, VP of sales and marketing, told analysts during the company’s quarterly earnings call. He says log available continues to limit the number of operating hours at our two coastal plants.

The company’s British Columbia interior mills operated at 96% of capacity in the third quarter, compared to 99% in the second quarter, with both Adams, in Delta, B.C., and Grand Forks, in Grand Forks, B.C., running at above rated capacity.

In the U.S. Pacific Northwest, the company’s mills ran at 84% of capacity in the third quarter, versus 77% in the second. Mills in the Southeast ran at 67% capacity in the third quarter, compared to 68% in the year-ago period.

Weather-related production constraints were offset by the addition of the Thomaston, Ga., mill and by the Swainsboro, Ga., mill which brought a new continuous drying kiln into operation in the quarter.

A new kiln at the Baxley, Ga., mill will be completed later this month and the company is in the permitting process at the Thomaston facility for a new kiln scheduled for completion later this month. “If everything goes as planned we should see a doubling of production from that facility midway through next year.” Hofer says.