Canfor Customer Update

Welcome to our latest edition of the Canfor Customer Update. Your feedback is appreciated, and helps us identify the topics that are most important to you.

Wayne Guthrie

Market Update

Well, autumn is here, football season is upon us, and the Blue Jays have made the playoffs for the first time in over 20 years. We hope you had a safe and enjoyable summer and were able to take some time off to enjoy with your families. 

Looking back at the season, we certainly saw the "dog days of summer" in the lumber business. As I write this, I am in China where I have been trying to get a sense of the balance of 2015 and also 2016 for not just China but also the global lumber market. 

Here are some observations. 

The relentless volatility in global currency resulted in major shifts in global supply. The bulk of the surpluses ended up in China (primarily from Russia and New Zealand), and in the US (primarily from additional shipments from within North America). The net result? Less North American exports than in recent years. 

In China, the deflationary pressure was also due to a slowdown in the macro economy, particularly with large infrastructure projects. This resulted in declining demand for lower-grade lumber. 

On a positive note, I am encouraged by our Chinese customers’ outlook for next year. That said, the balance of this year will remain sluggish. Lumber inventories are falling and the lumber business activity has bottomed out. We expect near-normal shipments to return after Chinese New Year; but while the volume will return, we will likely see only modest price appreciation for the next quarter or so.

In North America, demand is generally in line with the forecast, and business is reasonably good across most sectors with current consumption better than the first half of the year. Prices, however, fell due to the lack of steady export volume from both Canada and the US, primarily to China. We have canvassed many of our customers about their expectations for next year, and they are forecasting a better year with new housing construction expected in the area of 1.2 million (held back primarily by labour shortages), and R and R spending to increase by 5-6%.

Adding to the complexity is the end of the current Softwood Lumber Agreement, scheduled to expire on October 12. We believe any perceived impact from either an extension or an expiration is already factored into today's price. Whatever happens, we will find a way to work within the complexities of the market.

Looking ahead, we expect prices to grind higher as we move forward through the next couple of quarters. It will be volatile, however, as curtailments could cause spikes in prices resulting in a shift of supply back from Asia, or some early winter weather could cause prices to retreat. Crazy times, but at today's prices, it is pretty safe to call the trend from here to be upwards, albeit modestly.

It is a reality of our business that prices will move up and down, but Canfor will continue to service our markets and work closely with our customers. Thank you for your business. We appreciate your continued confidence in Canfor. 


North American customers are forecasting new housing construction next year to be better and in the area of 1.2 million.

New Business in China

There is new business in China, but you have to search a bit for it. One example is the furniture business. 

During my visit to China, I spent time in a "small" interior city of 1.5 million people. This farming community took up woodworking years ago to supplement their income in the off season. They produced wood furniture, mostly from domestic Chinese fir and cedar, and sold it in the larger centres. That wood culture still exists making this city home to thousands of furniture factories. 

Because it is far from the inflation-riddled mega cities like Shanghai and Beijing, the wage rates are still very low, making these interior furniture-making cities competitive locations to serve the domestic wood furniture needs. Very little Canadian wood makes its way here with supply mostly from Europe and Russia. That said, high grade SPF is a great fit, and our business here is on the rise. 



 Our high grade SPF is a great fit for the furniture made in the interior of China.

Growth Adds Value to our Customers 


Earlier this week, Canfor announced that we have entered into an agreement to purchase Anthony Forest Products Company (AFP), a company founded by two brothers that has manufactured high quality southern pine lumber for 95 years. 

AFP operates a southern pine lumber mill in Urbana, Arkansas; wood chip mills in Plain Dealing, Louisiana and Troup, Texas; as well as an engineered wood laminating plant in El Dorado, Arkansas; a laminating plant in Washington, Georgia; and a joint venture I-Joist plant in Sault Ste. Marie, Ontario, Canada. 

AFP is a leader in the forest products industry and has built its reputation on quality products and excellent customer service. We are excited about the exceptional value this partnership will bring to our growing US South presence, and how it strengthens our ability to serve our customers. 


Growth in the US South Expands Product Offering

In our May Customer Update, we began a three-part series to highlight each of our recent southern US acquisitions. In this issue, we focus on our acquisition of Balfour Lumber Company, which Canfor will fully own in January 2017. 

The Balfour mill is located in Thomasville, Georgia, an area known for high quality and sustainable fibre and trees that produce some of the cleanest, densest and strongest wood in the world. With the Thomasville plant, Canfor now has an expanded offering of SYP boards ranging from 1x4 to 1x12 C, D Select, #3, #4 Rough and pattern stock. The mill employs over 125 people and has a strong domestic and export following of customers. 


For more information on products from our Thomasville, Georgia mill, please contact:

General SYP Enquiries

Frank Turnbull - Divisional General Manager for SYP Sales and Marketing

Other Enquiries

Greg Fitz - Thomasville Sales Manager
1-800-763-2400 (US Only)



Customer Satisfaction Survey

Thank you to everyone who participated in Canfor’s 2015 Customer Satisfaction Survey. With a 77 percent response rate, we were pleased with the level of involvement and greatly appreciated the informative feedback. This direct feedback, in conjunction with overall survey results, helps us identify action items to enhance our customer service, product quality, and product supply, logistics and delivery. 

The survey results included positive feedback as well as constructive feedback from our SPF and SYP customers. We value both types of feedback since it helps identify what we are doing well and where we can improve. 

To address this valuable feedback, many action plans are already well underway for key areas that require attention. Moving forward, we are confident that you will notice improvements in your interactions with Canfor. 

Thank you again for your feedback, support and business. 




Softwood Lumber Agreement

The Softwood Lumber Agreement is set to expire October 12, 2015. Our position is that the agreement accomplishes what it was designed to do – the duties that are triggered when lumber prices fall result in a drop in Canadian shipments to the US. The effectiveness of the agreement and the certainty that it brings are the reasons why we have been working with the Canadian government and industry to promote an extension.  

While we are disappointed in the probable outcome, we are preparing for the expiry and the year-long standstill period and will remain optimistic that a new agreement will be made during this time. 

Taking a broader view, we see increased market development as a critical element to a long-term solution to the softwood lumber dispute. That’s why we are active members of the binational Softwood Lumber Board, and its work to open up opportunities for softwood lumber products has led to benefits on both sides of the border. 

Working together to “grow the pie” for all softwood lumber producers is an exciting collaboration between the Canadian and American forest industries, and we are optimistic that together we can build a stronger North American forest sector.