Canadian Lumber Market Finishes Up Year in Turmoil

Ever-changing trade policies with the U.S., a dismal housing market and subsequent mill closings continue to plague conditions.

North American lumber production is reportedly at its lowest level in more than a decade, particularly in Canada, which supplies a large percentage of the wood the U.S. imports. After a year in which the Trump administration produced a dizzying array of duties on Canadian lumber, the current tariff rate is at 35 percent, including anti-dumping provisions, but is even higher for specific companies according to published reports.

The result has been curtailments and even outright closings of Canadian sawmills, as major companies like Domtar, West Fraser, Drax and Conifex have all been impacted, according to a report in the HBS Dealer online newsletter.

Conifex, in a statement, blamed  “continued weakness in North American lumber markets. Benchmark Western SPF prices have declined sharply over the past several months due to a slowdown in new residential construction, soft repair-and-remodel activity, elevated interest rates and the impact of recently increased countervailing and anti-dumping duties on Canadian softwood lumber shipped to the United States.”

In announcing it was curtailing operations at its Mackenzie, British Columbia, sawmill for a four-week period starting this week, it added that the duties have “significantly compressed cash margins across the sector.”

For Domtar, the impact is the permanent closing of its Crofton, British Columbia, facility, reducing its annual pulp production by approximately 380,000 air-dried metric tons of northern bleached softwood kraft (NBSK) pulp. “The Crofton mill has been challenged for some time now,” said Steve Henry, Domtar paper and packaging president, in a statement. “Over the last 18 months, Crofton employees worked hard to reduce operational costs and they made some extraordinary gains. Unfortunately, continued poor pricing for pulp and lack of access to affordable fiber in BC necessitates the closure.”

For West Fraser Timber Co. it means it will “indefinitely curtail” operations at its OSB mill in High Level, Alberta, this upcoming spring once inventory levels are worked down. It will reduce the company’s capacity by 860 million square feet of OSB. It also confirmed its Cordele, Georgia, facility, which has been closed since late 2023, will remain idled indefinitely, taking another 440 million square feet out of its capacity.

Drax is also “ceasing operations” at its pellet plant in Williams Lake, British Columbia, stating, “The curtailment and closures of neighboring sawmills and the loss of a bid for key local supply have led to a significant reduction in fiber availability, thus making continuing operations at the plant no longer commercially viable. As a result, we expect to cease operations after an orderly wind-down when fiber availability runs out at the site, which we anticipate will take place by the end of 2025.”

Conifex said it remains optimistic about the longer-term view for Canadian lumber as interest rates come down and the U.S. housing market begins to recover.

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