Creekside lumber mill has been operating under an “indefinite curtailment” since early 2009.
But it’s a situation mill owner, Tolko Industries, would like to change.
So, with that in mind, management frequently assesses the economics to determine whether it makes financial sense to restart the dimension lumber operation.
According to Mark Everard, site manager for Tolko’s Lakeview and Creekside operations, that means comparing the market return against the expected log cost and conversion cost, the cost of making the lumber that includes labour, energy, overhead etc.
From there: “It either makes sense to go or it doesn’t.”
In the interim, Creekside’s planer runs periodically consuming the excess wood from the Lakeview facility.
While for now it’s status quo at Creekside, Everard is hopeful, given some recent positive indicators driven partially by the participation in the lumber market by players other than the United States.
The emergence of China and India, combined with the existing markets in Korea and Japan, has decreased Canadian producers’ reliance on the U.S.
“U.S. solid wood consumption is so large that it historically has dictated pricing around the world,” Everard says. “What has changed is that for the first time ever their consumption has lagged enough that they are merely an influential participant in the solid wood market rather than the dominant trend setter.”
In China, for example, the rapid rate of building and a move towards more timber structures has had an effect.
“China is maturing and their economics are changing where they can afford to participate in all levels of solid wood production; whereas historically their currency and their economy was such that they would buy a boat load of lumber now and then and usually the bottom spectrum,” he says. “Now they’re taking enormous volumes of everything.”
What this contributes to here in North America is a more favourable price and demand for lumber.
“Right now prices are better than one would normally expect given the volume of consumption in the States.
“It’s driven by significant export consumption,” Everard says.