2017 International Forest Industries Magazines April May 2017 | Page 26
LUMBER PROCESSING NEWS
Wood market reveals “Top 40” Canadian and U.S. softwood
lumber producers
The latest WOOD MARKETS
annual survey of the “Top 40”
Canadian and U.S. softwood
lumber producers featured steady
production growth in 2016 due to
the cooperation of a strong U.S.
market, plus growth in China.
Amid an absence of any major
mill acquisitions, almost all of
the production gains came from
existing mills. Of the top forty
companies, only three in Canada
and four in the U.S. recorded any
production declines – a sign of a
good year.
These and other industry
highlights were recently released
in the March 2017 issue of WOOD
Markets Monthly International
Report. The consultants at
International WOOD MARKETS
Group, Vancouver B.C. have
conducted this survey annually
since 1997.
The Canadian top 20 lumber
companies saw their output rise
from 19.6 billion bf in 2015 to 20.45
billion bf last year, while their share
of national production slipped
to 72% (from 74%). However,
Canadian mill investments in
the U.S. South are proving very
strategic due to the ample timber
supply in the region and high
sawmilling margins (the result of
low timber prices). As well, with
U.S. duties being implemented
on Canadian lumber shipments
commencing in May, Canadian mill
ownership in the U.S. is looking to
be a very astute move. While there
was no U.S. sawmill acquisition
activity in 2016 by Canadian
companies, the current collective
U.S. mill count of West Fraser,
Canfor and Interfor — 39 mills in all
— allows their sawmill operations
to enjoy excellent diversification.
Turning to the ranking of the
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top 20 Canadian firms, 12 were
based in Western Canada and
collectively produced 14.7 billion
bf (52.0% of Canada’s shipments);
this was higher by 390 million bf
(+2.7%) than in 2015. Production
for the top eight eastern Canadian
producers was 5.7 billion bf (20.1%
of Canada’s shipments), up 445
million bf (+8.4%) from the prior
year.
The top five Canadian
producers were as follows: West
Fraser, Canfor, Tolko, Resolute
and Western Forest Products.
Of note, West Fraser surpassed
Canfor as Canada’s top lumber
producer — a position the former
last held in 2011. Collectively, the
top five raised their production to
12.3 billion bf (43.0% of Canadian
lumber output), versus 12.0 billion
bf (45.1%) in 2015. West Fraser
inched up to lead spot, raising its
output by 197 million bf (to 3.80
billion bf; +5.5%) at its 13 mills.
Canfor dropped to second position
with 3.79 billion bf and recorded
a decline in output of 42 million
bf (-1.1%). Tolko placed third, with
its output falling by 63 million bf
to 1.90 billion bf (-3.2%) as it cut
production by half at its Quesnel,
B.C. mill beginning in October 2016
(it also closed its Merritt, B.C. mill
in Q1/17). Fourth-place Resolute
gained 166 million bf (+9.9%) to
reach a healthy 1.84 billion bf.
Western Forest Products saw its
output expand by 52 million bf (to
943 million bf ).
In the U.S., total lumber
shipments of the top 20 companies
rose from 19.7 billion bf to 20.9
billion bf (+6.3%). The top 20 U.S.
companies increased their output
at a pace that was almost twice
that of the entire U.S. industry and
50% more than that of the top 20
Canadian companies.
The top 20 firms produced
63.9% of all U.S. softwood lumber
shipments in 2016 (versus 62.1%
in 2015). Despite the lack of export
duties on Canadian lumber in 2016,
the larger U.S. sawmills enjoyed
excellent results. This growth
indicates the rising confidence
of the largest U.S. producers
(including Canadian owners) in
the housing market recovery and
corresponding lumber consumption
growth. The other apparent driver
behind these growth strategies
(on both sides of the border)
was the need to improve cost-
competitiveness by driving down
costs and increasing efficiencies.
As In 2015, Weyerhaeuser
retained its first-place U.S.
position through a moderate
increase of 230 million bf to 3.64
billion (+6.7%). Weyerhaeuser’s
acquisition of Plum Creek Timber
was the blockbuster deal of the
year: it included two sawmills
(with timberlands that are now
the core assets of the combined
companies with a total of 13 million
acres of forests). Georgia-Pacific
remained in second position with
an estimated 2.5 billion bf (+6.9%).
In third place was West Fraser,
growing its production by 131
million bf to 2.14 billion bf (+6.5%)
as a result of the rebuilt Quincy
mill being in operation for the full
year. Sierra Pacific was in fourth
spot with production down 22
million bf to 2.01 billion bf (-11%).
Interfor retained its fifth-place spot
with production of 1.61 billion bf, a
decrease of 101 million bf (-5.9%).
The top five U.S. firms produced
11.9 billion bf, representing 36.3%
of all U.S. lumber shipments, a
slight (3.5%) increase from 2015.
Four of the largest North
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24 International Forest Industries | APRIL / MAY 2017
American softwood lumber
producers have operations in
both the U.S. and Canada. These
publicly traded companies were
positioned in both the top six
in Canada and U.S. for last year
(the percentage of their 2016
U.S. lumber production is shown
in brackets): Weyerhaeuser
(81%), West Fraser (36%),
Canfor (26%) and Interfor (65%).
“When comparing the earnings
(EBITDA) amongst the four
companies,” noted Russ Taylor,
WOOD MARKETS’ President,
“Weyerha