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
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 costcompetitiveness 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
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 , “ Weyerhaeuser ’ s above-average earnings since 2014 is noticeable ( and has the highest percentage of U . S . mill assets ) and this does lead to a timely question : why is the U . S . claiming that Canadian mills are subsidized when Weyerhaeuser is achieving such exceptional financial results with only 19 % of its mill production in Canada ?” The other three Canadian-based companies achieved lower earnings than Weyerhaeuser over the same three-year period and have more Canadian-based mills than Weyerhaeuser
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24 International Forest Industries | APRIL / MAY 2017