Canfor's (T.CFP) $36 million B.C. mill investment rests on deal with union

Keta Kosman
0 Comments|December 6, 2013

As true winter weather finally hit most of the continent, continued strong demand following the US Thanksgiving long weekend was not enough to keep North American lumber and panel prices from dropping this week, writes Keta Kosman in Madison's Lumber Reporter
The usual seasonal variables came into play, forcing sawmills to finally accept counter-offers from persistent buyers.

Recent claims of sawmill order files right through to the holiday break had been strongly doubted by customers. This suspicion proved to have merit as several producers now admit to having orders booked only for another week or so.

Even so, demand continued stable and sales volumes remained encouraging.

Benchmark dimension lumber commodity Western Spruce-Pine-Fir KD 2x4 #2&Btr lost $10 on tough negotiations between traders, to end the week at US$370 mfbm. This is a $12, or 3.2 per cent, improvement over the same time last year. Readers will remember that solid wood prices rose from the beginning of December 2012 almost straight through to mid-March, when there was a serious correction downward.

Players hope that the price fluctuations of the past year and a half will be less extreme going forward, now that the supply-demand balance is better understood.

Manufacturers in most regions of Canada and the US told Madison's Lumber Reporter that log supplies at sawmills are very good, so there should be no immediate fibre supply issues to contend with.

As explained last week, the United Steelworkers' Wood Council now has tentative agreements signed with Canfor Corp. (TSX: T.CFP, Stock Forum) in British Columbia's northern interior, and with employers' group the IFLRA, representing Weyerhaeuser Co. (NYSE: WY, Stock Forum), West Fraser Timber Co. Ltd. (TSX: T.WFT, Stock Forum), and Tolko, in the southern interior. Both deals are waiting member ratification.

However, it turns out that negotiations are still in the early stages with West Fraser Timber and the CONIFER employer group, representing Conifex Timber Inc. (TSX: V.CFF, Stock Forum), Hampton Lumber, as well as West Fraser, in the northern interior.

An unusual announcement out of Canfor this week could provide an indication of how these labour agreements are going to be settled, or not. The company said in a press release Monday that it will make a previously-announced $36 million in capital investments at its Houston, BC, mill subject to union ratification of the tentative deal.

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Keta Kosman
Madison's Lumber Reporter
604 984-6838

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