Canfor Corp. Predicts Steady Lumber Prices Through Rest of 2017

SEATTLE (Scrap Monster): Lumber major Canfor Corp. has announced results for the third quarter of 2017. The company reported shareholder net income of $66.2 million or $0.51 per share during the quarter, slightly lower when matched with the net income of $81.3 million or $0.61 per share during the quarter prior to that. The operating income declined from $131.0 million in second quarter to $105.4 million during the third quarter of 2017.

Canfor reported lower operating earnings in both the lumber and pulp and paper segments. Lumber segment earnings were impacted by a decline in Southern Yellow Pine lumber prices, stronger Canadian dollar and increased log costs in Western Canada. These factors more than offset the benefits of higher Western SPF lumber prices. The pulp and paper segment benefited from reduced maintenance outages, improved unit manufacturing costs and increased energy revenues. However, these benefits were outweighed by the stronger Canadian dollar.

Lumber demand in North America remained relatively stable during Q3 2017. The US housing starts averaged at around 1.165 million units on a seasonally adjusted basis. This is more or less in line with the previous quarter, despite recent hurricanes in the US South. The housing starts in Canada averaged at near historic highs of 223,000 units on a seasonally adjusted basis. Demand for high-value lumber products from offshore markets including China, Japan and other regions remained strong through Q3 this year.

Lumber segment sales declined from $904.3 million in the previous quarter to $880.4 million in the third quarter of 2017. The sales revenue declined by 3% over the quarter. The lumber shipments totaled 1.37 billion board feet, very much in line with the previous quarter. The total lumber production too remained more or less unchanged from the previous quarter at 1.31 billion board feet. Lumber unit manufacturing costs too held steady when compared with Q2 2017.

The pulp shipments during Q3 ’17 were up by 10% from the previous quarter, primarily on account of increased production during the quarter coupled with increased shipments to North America and Asia. Pulp production totaled 305,100 tonnes. Meantime, the total paper shipments at 34,000 tonnes in Q3 2017 were down from the previous quarter. Canfor produced 34,800 tonnes of paper during Q3 this year.

Looking ahead, Canfor expects the North American lumber prices to remain steady. It forecasts the demand to remain solid through Q4 this year, with seasonally slower activity during December. The demand from key offshore markets is anticipated to remain solid through Q4 2017 and into 2018, the company noted.