TIMBER TROUBLE
Lumber prices spike as wildfires force B.C. sawmills to shut down,
Sawmills suspend production as fires sweep across province
WINNIPEG— Sweeping wildfires across British Columbia are threatening timber supplies and sending lumber prices surging.
More than 375 fires have swept across the province, burning forests and forcing sawmills to shut down or evacuate. While the impact on supplies is minimal so far, there are concerns that the blazes will continue to spread amid hot, dry conditions, according to Paul Quinn, an analyst at RBC Capital Markets in Vancouver. Lumber futures on Monday jumped by the exchange limit in Chicago to the highest in more than two months.
“Forests are getting burnt, so that has a supply impact. The worry is they’ll continue to grow and get bigger,” Quinn said, referring to the fires.
Last week, West Fraser Timber Co. suspended operations at three lumber mills that represent an annual production capacity of 800 million board feet of lumber and 270 million square feet of plywood. Norbord Inc., the largest North American producer of oriented strand board used in residential construction, has also suspended production at its mill in 100 Mile House in central B.C.
Cash prices for some grades of lumber rose 7 per cent last week, Quinn said.
“We’re at the seasonal peak in construction activity, so anything that reduces supply will create some pricing tension,” said Mark Wilde, an analyst at BMO Capital Markets in New York.
Shares of lumber producers have also climbed. West Fraser Timber rose 6.3 per cent last week and reached the highest since July 2015 on Monday. Canfor Corp. was little changed after increasing 7.4 per cent last week.
The wildfires aren’t just affecting the lumber business. Two mines in British Columbia have halted some operations in the Cariboo region due to the ongoing fires.
Taseko Mines Ltd. said it has idled its Gibraltar copper mine as evacuation orders for nearby communities have made it difficult for employees to travel to the site. The company says it’s unclear when operations will resume.
Meanwhile, Imperial Metals Corp. suspended operations at its Mount Polley mine on Sunday due to an evacuation order for nearby areas and increased restrictions on highway use in the area.
The company says it will resume operations once the situation stabilizes.
Both companies say their mines are not currently threatened by the fires.
Meanwhile, Kinder Morgan Inc. said Sunday it continues to closely monitor the fires and is taking preventative mea- sures particularly around its Blackpool pump station near Little Fort, B.C., including setting up a sprinkler system around the perimeter fencing and the pump building.
And Tolko Industries Ltd. shut down its Soda Creek and Lakeview mills, the company said Saturday in a Facebook post, adding that “they will not be operational for the foreseeable future.”
The B.C. government declared a provincial state of emergency — its first for a wildfire since 2003 — on July 7, and since then a number of sites, including forestry operations, have been temporarily shut down or are operating at reduced capacity.
Thousands of people have been forced from their homes as emergency responders continue to fight dozens of fires covering hundreds of square kilometres.
Taseko owns a 75-per-cent stake in Gibraltar, which it says is the second largest open pit copper mine in the country.
Imperial owns the Mount Polley open pit copper and gold mine through a subsidiary.