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

New Technology Platform: Working Through Issues to Improve Service

On July 1, Canfor became one of the first in the lumber sector to launch a new advanced technology program. Unfortunately, as is often the case with this kind of major systems overhaul, there have been service disruptions. I want to apologize for this and thank you for your patience.

We are confident the issues will be sorted out by the end of the third quarter, and the new platform will begin to increase our forecasting ability and improve supply chain performance, among other benefits.

This will help us stay in step with the growth of our company and our customers, and provide the real-time inventory and tracking information our customers want.

We are working hard to restore our service delivery to the standards we expect and our customers deserve. If you encounter difficulties, please contact your Canfor representative, Frank, or myself as soon as possible so we can dedicate resources to correcting the problem.

Market Outlook

North America

As the chart below from Foreign Affairs, Trade and Development Canada shows, the lackluster shipments by the B.C. industry in Q1 were offset by strong shipments in Q2 – with the Q2 surplus roughly equalling the Q1 deficit.

This suggests mills were able to deal with excess inventory built up earlier in the year. This was certainly true at Canfor where our transportation team found creative solutions to make sure our customers had the stock they needed as efficiently as possible. As noted in the last Update, we are working hard to develop contingency plans to avoid a repeat next winter.

The 2014 YTD average volume is 2% higher than the 2013 average, and basically in line with the demand change. North American customers appear to be making cautious purchasing decisions, with steady consumption rather than demand surges. As a result, there was less volatility in Q2 2014 than in Q2 2013, and while there was a seasonal price correction, it was much less than in 2013.

Based on the above inventory information, it appears the market has found a trading range. Using W-SPF 2x4 #2 RL as a benchmark there’s good support, including from offshore markets, when the market dips below $325.00, and strong resistance when it spikes over $375.00.

We expect it to remain at about $350.00 on average for the balance of 2014. This will actually end up slightly lower than 2013, mainly due to the slower-than-expected U.S. housing recovery.

There are a number of things offsetting the sluggish housing market, such as more R&R activity, especially since May when long-awaited spring weather finally started to arrive.  There is more wood being used in multi-family housing – it was cited as a bright spot in the U.S. Federal Reserve Board’s semi-annual Monetary Policy Report and the FEA says multi-family lumber consumption was 21% higher in Q2 versus Q1.  There is also more lumber consumption in Canada, especially in the West with rebuilding after last year’s floods.

This allows us to be cautiously optimistic despite the slower-than-expected recovery in the U.S. housing market. We will continue to watch head-wind issues such as the lack of developed land, a shortage of skilled labour, and a tight financial system that makes it harder for buyers to qualify for mortgages.


We had record offshore volumes after the strike by container truck drivers at the Port of Vancouver ended in March. Log inventory in China remains high, which may mute price increases, but the SPF inventory is quite low so volume should remain stable for the balance of the year.

Canfor Red Anniversary

We’re about to celebrate the second anniversary of the launch of Canfor RED . Customer response to this new product line has been extremely positive. It offers the same grades and structural performance as all our products, with the advantage of coming from some of the nicest fibre available anywhere in the world. We continue to believe our Canfor RED brand has many advantages – including representing the highest quality MSR in the industry and being available with FSC certification. You can contact Frank Turnbull ( or 604-264-6285) or Bob Smith ( or 604-661-5277) for more details.