Lumber production in the third quarter was 567 million board feet, down 15 million board feet or 3% compared with the second quarter. Adjusting for the production of the Beaver-Forks operation which was closed permanently at the end of the second quarter, production was up 7 million board feet compared with the second quarter and up 143 million board feet relative to the third quarter of 2013. Net earnings in the third quarter include $0.7 million of expenses associated with the wind-down of the Beaver-Forks operation.
Average commodity lumber prices varied by species and dimension in the third quarter. The Western SPF 2x4 benchmark price increased US$22 to US$357, rebounding from a year-to-date low in June, while the SYP Eastside 2x4 benchmark price improved US$33 to US$438. Prices for wide dimension SYP fell US$15 to US$60 depending on width as demand for those products adjusted to seasonal
factors. The HF Stud 2x4 9’ benchmark price dropped US$24 to US$385 as supply outpaced demand while 8’ was up US$13. Demand for lumber in China was steady in spite of tighter credit conditions while price levels softened by approximately 5%. Prices in Japan were 5-7% lower as the market adjusted to the recent VAT increase as well as increases in domestic supply and a drop in the value of
the Yen.
North American commodity lumber prices during the fourth quarter should continue to reflect the slow but steady increase in U.S. housing demand. Demand and prices in China are expected to remain stable in the fourth quarter. Japan is expected to
remain soft as the housing market adjusts to the VAT increase and changes in currency values.
Interfor’s Board of Directors has approved a $50 million capital project to upgrade the Company’s sawmill in Castlegar, BC. The project will convert the Castlegar mill to a 2 line operation with state-of-the-art technology and optimization. “We expect significant improvements in lumber recovery, productivity and grade outturns as well as lower conversion costs as a result of the investment,” said Duncan Davies, Interfor’s President & CEO. The project w ill also eliminate the need for approximately $20 million in maintenance-related capital spending over the next four years. Rated capacity of the mill calculated on a full two shift basis will be
in the range of 210 million board feet per year compared with the current level of 185 million board feet. Proforma cash payback on the project is less than three years. The project is scheduled for completion in the fourth quarter of 2015 and will require approximately 30 days of operational downtime during the construction period. Full operating perf ormance is targeted for
the first quarter of 2016.
In the first nine months of 2013 Interfor realized $1,058.2 million of total sales, up 34.0% from $789.9 million, driven by the sale of 1.7 billion board feet of lumber at an average price of $517 per mfbm. Lumber sales volume and average selling price increased 400 million board feet and 4.7%, respectively, over the same period of 2013. The growth in lumber sales volume was primarily in the U.S. market, where sales increased by 376 million board feet or 49.4% over the first nine months of 2013. This growth is mostly attributable to the six sawmills in Georgia acquired since March of 2013 as well as increased demand. The increase in the average selling price of lumber is primarily related to increased demand and the strengthening of the U.S. dollar against the Canadian dollar by 6.9%, partially offset by an increased proportion of Southern Yellow Pine sales.
Log sales of $107.4 million represents an increase of $12.1 million or 12.7% compared to the same period of 2013. This sales growth benefited from a 14.8% increase in B.C. log sales volume. Sales of wood chips and other residual products increased to $76.4 million, up $24.0 million over the comparable period of 2013. This increase mainly reflects the 31.0% increase in lumber production over the same period in the prior year.
Interfor is a lumber company with operations in Canada and the United States. The Company has annual production capacity of 2.4 billion board feet and has diverse lines of lumber products to customers around the world.
