BC wildfires contribute to timber supply concerns

A Level 5 extreme emergency has been declared in British Columbia as 26 new lightning-caused fires were discovered in the Southeast and Prince George Fire Centres on July 10. Our thoughts and prayers go out to all our close friends and colleagues in the affected regions. Currently six SPF mills are shut down. One major supplier, West Fraser has temporarily suspended operations in 100 Mile House, Williams Lake and Chasm. In the case of the 100 Mile House mill, the staff and community have been evacuated to comply with evacuation orders in the surrounding areas.

Market Impacts
Based on our knowledge and perspective, here are some important points for consideration:

  • Mill shut-downs historically drive prices, whether the cause is natural disaster or planned curtailments.
  • Time of year – summer construction spurs the highest usage volume. In a May 2017 survey for the NAHB/Wells Fargo Housing Market Index, 21% of single-family builders reported a shortage of framing lumber. This signals a significant shift from three years ago, when only 15% of builders cited any sort of shortage of building materials in the 2014 survey.
  • The Canadian Softwood Lumber AD/CVD impact is now realized and the situation is relatively stable. However, rumors are that a new 10-year SLA is near completion and includes further U.S. import restrictions.
  • Fire proximity to SPF timber stands are in extreme and high danger status.
  • Log decks, the volume of timber a mill has on hand, are less than normal because of a longer spring breakup.
  • Several highly traveled transportation corridors are closed which has forced rail and truck operators to find longer, alternate delivery routes.

There have been more than 600 fires during the current fiscal year, representing over 107,000 acres of forestland. In a typical year the BC province will see over 2,000 fires, the vast majority of which are contained within 24 hours. The ‘Summer of Fire’ will only get worse. According to Dave Phillips Environment Canada’s senior climatologist, interior B.C. hasn’t seen rain in 28 days and hasn’t had more than a “thimble-full” in 53 days. Lumber prices are up 6-10% with prime grades of SPF even higher, and this trend could continue over the next few weeks. Normalcy may not return until the summer construction starts to wane and fire season ends.

Belco is closely monitoring the situation and will continue to post updates in our News Center. As always, we remain committed to providing our customers with the best product, at the best value, in a timely manner and stand behind it. This includes remaining competitive with direct and indirect competition during volatile periods.