Canfor Corp. (CFP), the second-largest North American softwood producer, is “excited” about the increase in “high-value” shipments of Canadian wood to China, said Wayne Guthrie, the company’s senior vice-president of sales and marketing.
“We’re pretty excited about the shift in value,” Guthrie said today at the Bloomberg Canada-Asia Conference in Vancouver. “It’s been an exciting 10-year ride since we started in China with no sales.”
China is emerging as a critical market for Canfor, West Fraser Timber Co. and other Canadian wood-product makers after they were faced with losses, mill closures and layoffs following the U.S. housing collapse. Canfor’s exports to China have soared to 25 percent of total lumber sales by volume, up from 4 percent in 2008, according to regulatory filings.
The influence of Chinese lumber demand on North America’s wood-products market will get stronger as the U.S. home-building industry continues to recover, Guthrie said last week.
Without sales of 3 billion board feet of wood a year to China, “we’d have considerably lower prices,” Guthrie said.
Benchmark prices for British Columbia lumber made from spruce, pine or fir trees have risen 29 percent in the past 12 months, according to data compiled by Bloomberg.
Guthrie said an expected reduction in the volume of trees harvested each year in British Columbia will put additional pressure on prices.
The provincial government had been encouraging lumber makers to accelerate the harvesting of trees killed by the world’s largest infestation of mountain pine beetles to salvage as much value as possible before the wood rotted. The effects of the infestation, which dates back to at least 1999, has reached its peak.
“We are already seeing reductions” Paul Jannke, a Westford, Massachusetts-based timber-industry analyst at Forest Economic Advisors LLC, said by e-mail. “Supply will be constrained relative to demand in 2014.”
West Fraser is the largest Canadian soft-wood producer by 2011 output, according to a June report by the Royal Bank of Canada.