Sawmill Stocks, Lumber Futures Are Rebounding From the Depths

By Ryan Dezember

Shares of sawmill owners are way up and lumber futures have risen by the most allowed by exchange rules following Canfor’s announcement that it would close two mills in British Columbia, the latest cutbacks from an industry recalibrating output amid slowdowns in homebuilding and remodeling.

Canfor said it would permanently shutter its mill in Chetwynd, British Columbia, and close a larger facility in nearby Houston while a newer facility is built there. The two mills represent about 6.5% of lumber-making capacity in the Canadian province.

Altogether, permanent and temporary curtailments announced by Canfor and its rivals since lumber prices have dropped from their pandemic highs have reduced North America’s sawmill capacity by about 2.2%, said BMO Capital Markets analyst Ketan Mamtora.

That’s been enough to reverse the slide in lumber prices, which have been tumbling from their pandemic highs since the Fed start raising interest rates last year. Futures have now risen by the most allowed by exchange rules twice this week, a sign of how the increasingly consolidated sawmill industry has strengthened its pricing power.