Canfor, one of the world’s largest forest companies, has reported a USD 67 million loss for the second quarter, with a USD 37.9 million loss from its pulp division.
Like West Fraser Timber, which posted a USD 173 million second-quarter loss yesterday, Canfor attributes a large portion of its falling profitability to a weak pulp and paper market
West Fraser Timber stated yesterday, ‘Declining pulp prices led to a significant inventory write-down.”
“As a result, our pulp and paper segment experienced higher losses than expected.'”
Canfor highlighted its successful sawmill operations in Europe and the South of the United States with “persistent challenges in British Columbia” and “significant deterioration in global pulp market fundamentals.”
“These results, for the most part, reflect the impact of substantial global pulp pricing declines in the current quarter driven by elevated global market pulp producer inventory levels and weak global softwood pulp demand,” Canfor Pulp said.
According to Canfor, global softwood pulp market fundamentals and pricing experienced considerable pressure “as tepid global demand was combined with rising global softwood pulp producer inventory levels.”
Canfor reported that prices for northern bleached softwood kraft pulp in China averaged USD 668 per tonne, a decrease of USD 223 per tonne (or 25%) over the previous quarter.
Canfor was among the companies greatest impacted by the British Columbia port strikes.
“The labour dispute at the ports of Vancouver and Prince Rupert that commenced on July 1, 2023, put pressure on a constrained logistics network in British Columbia,” Canfor noted.
As reported by Wood Central last week, Canfor said it was running out of space to store its pulp and engineered wood product as the strike by dock workers hit the critical ports of Vancouver and Prince Rupert.
President and CEO Kevin Edgson said the dispute affected roughly 70% of its pulp products destined for Asia.
Canfor spokesperson Michelle Ward said earlier this week the company was poised to continue with plans to curtail operations down to a skeleton crew.
“As a direct result, with pulp mill inventories at capacity, the company curtailed its Northwood pulp mill in July for approximately one week, with an estimated 10,000 tonnes of reduced NBSK pulp production.”
A USD 6.9 million write-down impacted Canfor Pulp’s operating loss for the second quarter.
It shut down the pulp line of its Northern Bleached Softwood Kraft pulp and paper mill in Prince George, which led to the write-down.
“In January 2023, Canfor announced that it will restructure its operating footprint to align its manufacturing capacity with the long-term supply of economic residual fibre,” Canfor said in a media statement.
“As a result, in April 2023, the company wound down and permanently closed the pulp line.”
“In connection with this closure, the company’s Intercontinental NBSK pulp mill… was successfully converted to provide slush pulp to its speciality paper facility.”
“The combined impact of these operating structure changes is an annual reduction of approximately 280,000 tonnes of market kraft pulp production.”