Canada wood prices to rise as western wildfire interrupts logging
11/07/2017 20:48
By Ethan Lou
CALGARY, Alberta, July 11 (Reuters) - Rapidly spreading
wildfires in British Columbia are set to tighten the supply of
wood products and raise prices as they disrupt timber operations
during the year's peak building season, analysts said on
Tuesday.
Forestry products are a significant driver of the economy of
British Columbia, which bills itself as the world's biggest
exporter of softwood lumber, a product targeted by new U.S.
tariffs in April as a trade dispute escalated.
Pockets of fires across the western province intensified
last Friday and have since covered more than 38,000 hectares
(93,900 acres). They have forced more than 14,000 people from
their homes, disrupted mining and forestry operations and
damaged public utilities. urn:newsml:reuters.com:*:nL1N1K112N
Wood prices can rise as high as 6 percent if operations
remain shut for weeks but the higher cost, a small part of
construction budgets, will be absorbed by builders and is
unlikely to affect home buyers, Bank of Montreal analyst Ketan
Mamtora said in an interview.
Forestry companies that have suspended production include
West Fraser Timber Co WFT.TO and privately held Tolko, among
the largest Canadian producers, and Norbord Inc OSB.TO , the
world's largest maker of oriented strand board, a plywood-like
material used in house building.
Mamtora said West Fraser's shutdown represents a loss of
about 6.7 percent of interior British Columbia's lumber
production and 13.8 percent of Canada's plywood production,
while Norbord's shut mill represents 5.6 percent of Canadian
production of oriental strand board.
The companies said the facilities were shut due to
evacuation orders and nearby fires, although the sites
themselves were not burned.
James Armstrong of Armstrong Investment Research said the
shutdowns will exacerbate the low supply for an already tight
market.
"The question is what happens longer term," he said. "We
don't know what happens with the fire yet. Longer term, if it
misses the mill and doesn't do much, it probably won't have a
huge impact."
Mamtora said prices could increase up to 14 percent if the
sites remain shut for months.
The fires broke out some 14 months after a wildfire in Fort
McMurray in neighboring Alberta province displaced 88,000 people
and burned 590,000 hectares.
British Columbia on Friday declared its first state of
emergency since 2003. Authorities said at least 10 of more than
200 fires burning across the province were close to residential
communities, although no deaths or serious injuries have been
reported.
(Reporting by Ethan Lou; Editing by Bill Trott)
((Ethan.Lou@thomsonreuters.com; +1-403-531-1634; Reuters
Messaging: ethan.lou.thomsonreuters.com@reuters.net))
Keywords: CANADA WILDFIRE/LUMBER