Canfor has named the conflict in Iran as the single biggest risk to its second quarter, warning that petroleum-driven supply chain disruption will drag on lumber demand and lift costs for US homebuilders just as the housing recovery looks for traction. That is according to the Q1 2026 financial results released to the Toronto Stock Exchange on May 6, with President and Chief Executive Officer Susan Yurkovich telling shareholders the conflict is reshaping the demand outlook even as a tighter supply backdrop dragged Q1 results sharply off the CAD $415.9 million Q4 blowout.
Canfor reported an operating loss of CAD $72.5 million and a shareholder net loss of CAD $72.1 million for the quarter — a result delivered just six weeks after the company moved to acquire the remaining issued shares of Canfor Pulp Products on March 17 and consolidated the pulp arm under full ownership. Lumber drove a CAD $43.7 million operating loss; pulp and paper added another CAD $16.2 million.
“The first quarter of 2026 continued to reflect challenging market conditions across our global operations,” Yurkovich said, adding that improved results were a function of higher production volumes and a North American lumber price recovery driven by tighter supply, with late-quarter weather disruption across British Columbia and the US South pinching the market further.
It traces back to Hormuz.
Following the Iranian Revolutionary Guard action that closed the Strait of Hormuz on February 28, waterway traffic fell 80 per cent within 24 hours and has not recovered since. Industrial diesel prices across Asia have climbed 140 per cent since the closure, with crude pushed above US $110 per barrel and ocean freight surcharges of up to US $5,000 per container now baked into trade lanes that depend on Gulf transit.
For US homebuilders, the timing is brutal.
Full-year 2025 single-family housing starts fell 7 per cent to 943,000 units — the weakest annual result since the pandemic recovery — and NAHB Chair Buddy Hughes has previously appealed directly to US Trade Representative Jamieson Greer over the cumulative tariff impact on construction, with the body estimating combined tariffs and duties have added at least US$10,000 to the cost of a new dwelling. Section 232 lumber duties hold the effective burden at 34.83 per cent for most Canadian producers through August, with Canfor a mandatory respondent in that review, with a final determination due in August.
Total lumber shipments fell 6 per cent on the prior quarter to 1.26 billion board feet. Europe was off by 9 per cent due to cold-weather production impacts. North America fell 4 per cent due to British Columbia rail constraints and US South weather disruption. Production, however, lifted 2 per cent to 1.21 billion board feet as North American operating hours rebuilt following Q4’s seasonal holiday downtime.
Western SPF 2×4 #2&Btr averaged USD $463 per thousand board feet for the quarter, up 10 per cent on Q4 2025, whilst SYP East 2×4 #2 averaged USD $495 per thousand board feet — a 35 per cent jump. None of which made it through to Western SPF unit sales realisations, which were broadly flat: weaker offshore returns and a 2 per cent stronger Canadian dollar erased the benchmark lift before it hit the bottom line.
Whilst Asia was described as challenging, the China problem is structural. Official Chinese data shows real estate investment fell 11 per cent year on year across January and February 2026, with sales of newly built commercial housing by floor area down around 14 per cent over the same period. Japan softened too, on higher import volumes from Canada and Europe and a continued shift toward domestic wood use.
European demand stayed weak with slightly lower pricing quarter on quarter, though spruce showed late-quarter improvement after industry curtailments tightened supply. Elevated pine inventories continue to weigh on prices — particularly in the United Kingdom — with higher freight costs and the Iran conflict piling onto Canfor’s Vida sawmilling operations across southern Sweden.
Pulp and paper improved on the previous quarter, lifted by a modest US-dollar pricing uplift on global supply disruption and a 30 per cent rise in pulp shipments. Average NBSK list prices to China averaged USD $685 per tonne, up 2 per cent, while producer inventories closed February at 47 days of supply — the top end of Canfor’s stated balanced range.
Yurkovich said pulp headwinds had carried straight into the new quarter with producer inventories sitting well above trend. Canfor has scheduled a Q2 maintenance outage at its Intercontinental NBSK pulp mill, expected to strip around 20,000 tonnes of market pulp output, alongside a paper machine outage flagged to remove a further 5,000 tonnes.
For lumber, the company expects North American markets to soften later in Q2 as supply increases in response to recent price improvements, with macroeconomic uncertainty and heightened geopolitical risk continuing to constrain demand. The Iran conflict is flagged as a particular risk to new housing construction across the United States.
It comes as the wider North American sector continues to grind through what was a brutal 2025, with Canfor permanently closing its Estill and Darlington mills in South Carolina last year and stripping 350 million board feet of annual capacity from the market. West Fraser, Domtar, and Interfor have all curtailed, with capacity being released from the system faster than weak demand can absorb.
As of March 31, Canfor reported CAD $60.2 million in cash and equivalents on a consolidated basis, including Vida, against CAD $440.8 million drawn on operating loans, CAD $53.0 million reserved for standby letters of credit, and CAD $906.5 million in undrawn operating loan facilities. Canfor’s next test arrives in early August, with Q2 results due alongside the US Commerce Department’s final softwood determination and the conclusion of scheduled NBSK and paper machine outages that will strip 25,000 tonnes from the market.
