Instability in the lumber market is leading to production shutdowns in Canada. Canfor Corporation (TSX: CFP) last night announced that it will be reducing production due to a number of market factors.
Canfor is describing the event as a “temporary reduction in Canadian production,” with production curtailment to occur at all production locations in Alberta and British Columbia. Collectively, the curtailment is set to reduce production by 150 million board feet in the months of December and January at solid wood facilities.
The production reduction follows an announcement in September by the firm that it would be reducing its British Columbia production by 200 million board feet through the remainder of 2022. This latest reduction is believed to be in addition to those production cuts.
The production reduction is being blamed on “very weak market conditions,” as well as decreased demand in solid wood products and challenging economic conditions.
The production curtailments are anticipated to begin on December 19, and last for one to four weeks. Canfor also anticipates that the majority of its BC facilities will operate below capacity in 2023.
“Due to the significant decrease in demand for solid wood products and challenging economic conditions, we are temporarily curtailing production in Canada. We will be working to mitigate the impacts on our employees by providing support and identifying meaningful work during the downtime,” commented CEO Don Kayne.
Canfor Corporation last traded at $23.52 on the TSX.
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