Stack of framing lumber
Craig Webb

Eight Canadian and six U.S. firms among North America's top 40 lumber producers experienced declines in production in 2017, and North American shipments overall rose just 1.2% last year, FEA Canada/Wood Markets reports.

These production declines are "not the trend you'd expect t during a time of near-record high to record-high lumber prices," the research group's managing director, Russ Taylor, wrote April 5 in conjunction with the release of the March issue of its Wood Markets Monthly International Report.

Total North American softwood lumber shipments rose for the seventh consecutive year in 2017, to 61.9 billion board feet (bf) from 61.16 billion bf. "Steady growth in the U.S. housing market, combined with strong activity in residential repair and remodeling and a favorable export market in China, did not result in any significant production gains, but it did yield very high prices," FEA Canada/Wood Markets said. "Supply disruptions in western North America interacted with other events, leading to production stoppages or slowdowns. As a result, Canada’s total shipments declined by 1.7% (down 480 million bf to 28.04 billion bf), with total U.S. shipments gaining 3.7% (up 700 million bf to 33.86 billion bf). "

All regions in Western Canada recorded declines, with the largest-volume drop seen in British Columbia, down 5.1%. In contrast, U.S. shipments from the South rose 5.1% while shipments from Western states climbed 2.0%. Eastern Canadian shipments also rose, jumping 12.8% in Ontario, only 0.7% in Quebec, and 1% in the Atlantic provinces.

"The gains in the U.S. and Canada were due mainly to a mix of mill restarts, upgrades and extended shifts," the report said. "At the same time, British Columbia Interior mill production was constrained by forest fires, ongoing sawlog supply limitations caused by the mountain pine beetle infestation, and the implementation of duties on Canadian lumber exports to the United States."

Canada's top 10 producers saw shipments slip 1.4% in 2017 to 16.16 billion bf; that's 57.6% of the nation's total production. The top 10 U.S. producers rose 4.8% to 17.77 billion bf. They account for 52.5% of all U.S. softwood lumber shipments.

"The wild card for 2018 is the extremely high level of U.S. lumber prices (inflated partly by the imposition of U.S. duties on Canadian lumber and also because only small increases in North American lumber output)," the report said. "High prices attracted a 50% increase in offshore exports in 2017 and there are a dozen new sawmill projects planned for the U.S. South. As a result, U.S. lumber production will be expanding, but at some point this new supply (and imports) will put negative pressure on prices."