Canadian Lumber firms eye major expansion in the in the US Southeast

VANCOUVER (Scrap Monster): According to recent statistics published by the Forest Economic Advisors LLC, the production share of Canadian lumber firms in eight southeastern US states has grown from 3% a decade before to 25% currently. The abundant timber wealth in the region, low log prices and rising US housing starts has benefitted the firms in the region.

The closing down of domestic mills in the US southeastern region and severe beetle infestation in BC woods prompted many Canadian lumber companies to expand into the US southeast region. Vancouver-based West Fraser Timber Co., Interfor Corp. and Canfor Corp. were a few among the Canadian firms to make entry into the potential market years before.

In a major acquisition spree in 2007, West Fraser had acquired 13 sawmills in the region from International Paper Co. Interfor had acquired three sawmills from Florida-based Rayonier Inc. in 2013. Since then, it has acquired four Georgia mills, one sawmill each in South Carolina and Arkansas. The company has acquired nine mills in the region in the past two-year period.

The Canadian companies are predicted to be in a very good position, as US housing starts have shown signs of resurgence. The US housing starts which witnessed sharp jump of 12.3% in June ’15 had risen slightly by 0.2% in July. The margins of the mills in the US southeast region are much higher when compared with other regions. With log prices at current levels and housing market remaining upbeat, the margins are likely to improve further.

More acquisitions are likely to happen going forward. According to Interfor, the company is looking at all possible opportunities to expand further in the US southeastern region, as it sees limited expansion possibilities in the B.C region.