New Brunswick lumber companies quietly beat revenue records – fr

New Brunswick lumber companies quietly beat revenue records – fr

Demand for lumber has been so high at Randy MacNichol’s independent sawmill in Salisbury, New Brunswick, that he’s struggling to take the time on the phone to answer questions about it.
“There is no stock of lumber in my yard,” MacNichol said during a five-minute conversation about the daily parade of callers asking for lumber.

“It didn’t slow down. I’ve had six beeps since you called me ”

MacNichol sells lower quality unprinted or machined lumber for smaller scale projects.

An incessant demand

Its operation is modest. But with relentless demand and record prices for lumber in North America, all lumber companies, including his, have a banner season.

“My guys in the woods are going to have a little more this year and old Randy is going to have a little more this year,” he jokes.

MacNichol is open about his success, but others in the province aren’t offering as much information.

Industry groups like Forest NB and New Brunswick Lumber Producers have said little about the change in fortunes in their industry and last week did not respond to requests for comment on how factories in the province are faring.

Randy MacNichol said demand for lumber “has not slowed”. (Tori Weldon / CBC)

But after years of battling the rise and fall and tackling rights and subsidy claims in the United States, New Brunswick logging companies are almost certainly breaking their own records. sales and record record profits.

A measure of this came in a Statistics Canada report last month that showed the value of treated and untreated lumber production in New Brunswick in January and February was $ 286.1 million, a figure without previous.

The amount is not just a New Brunswick record, but $ 140 million more than the industry has ever earned in those two months, according to figures dating back to 1992.

Softwood lumber leakage cost

The windfall is almost entirely caused by the soaring cost of lumber in North America, which in February was trading in the markets at average prices 169% higher than in 2019.

Those prices then spiked again in March, and went even higher in April, with every operating sawmill in the country earning record amounts on every plank it can push and bring to market.

Wood chips are stacked at the JD Irving sawmill in Sussex in March. (Submitted by Ronnie Davis)

Last week, two of the top five lumber producers in Canada, Canfor Corporation of Vancouver and Resolute Forest Products of Montreal, released their own results for the first three months of 2021.

The companies, which had lost a total of $ 84 million on their lumber business in the first three months of 2020, earned $ 828 million in the same 90 days this year, a sign of the dramatic improvement. improvement.

Bank of Montreal analyst Mark Wilde marveled at the sheer volume of money and, on call for Canfor’s earnings, asked the company’s CEO Don Kayne to find out if an industry isn’t accustomed to such large profits was ready to face such sudden riches.

“There are a lot of sailors hitting town with a lot of money in their pockets, so stupid things can happen,” Wilde said.

Kayne said the company is still evaluating how to deal with this windfall. “We take a very cautious approach before making decisions. “

Several provinces have increased royalties for logs used by sawmills to match price increases for lumber produced, but New Brunswick has not. The royalty rates set in 2015 are still in effect. (Graham Thompson / CBC)

Other major Canadian lumber companies are expected to report profits this week, but in New Brunswick most operations are private and do not report their results publicly.

JD Irving Ltd is the fifth largest lumber producer in Canada, according to a ranking released last week by Forest Economic Advisors. JD Irving Ltd did not respond to a request for comment on its recent sales experience.

The surge lasted for a year

Overall, New Brunswick ranks fifth among the provinces as a manufacturer of wood products, but on a per capita basis it is almost the largest, just ahead or behind British Columbia from month to month. the other.

New Brunswick lumber companies have seen product price spikes in the past, such as brief spikes in the summer of 2018 and spring 2002, but nothing as big or as lasting as the current wave which is now in its 12th month.

It is not clear how well New Brunswick companies are doing in today’s market. (Sara Jabakhanji / CBC)

Companies like Canfor and Resolute have to pay increasing royalties for the lumber they use in provinces like British Columbia, Alberta and Ontario as the price they get for lumber produced from these. trees increases. But New Brunswick businesses are not facing the same increasing expenses.

“These (royalty) prices reflect local demand and supply factors,” Nick Brown wrote on behalf of the New Brunswick Department of Natural Resources and Energy Development last month, explaining why the timber royalties in province do not increase to match record prices for wood products. .

“Since the overall supply of stumpage has remained generally constant and the overall capacity of the mill has not increased, there has been no significant increase in demand or supply of timber. on foot at the local level. ”

It’s unclear how well New Brunswick companies are doing in today’s market, but MacNichol says now is the right time to sell lumber.


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