A downturn in North America’s housing market is slashing demand for lumber and threatening to shut down sawmills in British Columbia, one of the continent’s biggest timber producing regions.
Lumber futures have slumped about 62 percent this year. Prices are so cheap that they may result in sawmill closures as companies try to reduce supplies, according to RBC Capital Markets analyst Paul Quinn.
“We are below the bottom, so B.C. producers are losing money,” said Quinn. “I suspect we will get a number of sawmill closures over the next year.”
It’s a far cry from the all-time highs set in 2021 during a pandemic-fueled homebuilding boom. This year’s surge in borrowing costs has made homes too pricey for buyers. The Federal Reserve’s recent rate hike added to the gloom as Chair Jerome Powell said the housing market was “very overheated” during the pandemic.
Canadian producers West Fraser Timber Co. and Canfor Corp. already announced reductions in output at B.C. sawmills this year.
U.S. homebuilders get more than a quarter of their lumber from Canada.
