Coronavirus forces Canadian sawmill curtailments

The coronavirus outbreak has forced Canadian lumber firms to make further curtailments at sawmills nationwide, potentially reducing feedstock availability for the country's wood pellet producers.

The pandemic has suppressed global demand for forest products and caused disruption across supply chains, driving firms to suspend some operations.

Canadian lumber firm Interfor has temporarily cut sawmill output by approximately 85pc from this week, following a temporary processing reduction of 60pc that started on 18 March "in order to align production with the prevailing market". The curtailments have been implemented at its sawmills in British Columbia (BC), and in the northwest and south of the US. Interfor "will continue to evaluate and adjust production based on evolving market conditions," as well as employee safety, it added.

Fellow Canadian timber firm Canfor is from this week cutting lumber processing by 40pc for a three-week period. The reductions will take place at "several British Columbia sawmills through a combination of temporary plant curtailments and reduced operating hours", Canfor said. It is also slashing output at its US mills by 40pc over a four-week period and will be assessing all curtailments weekly, adjusting "as needed," it said.

West Fraser Timber has also implemented curtailments at its mills in west Canada — cutting output by 18pc from 23 March until "at least" 6 April. And it added a full week of shutdowns at its BC mills on 30 March, which takes output down by 54pc overall. It is also reducing processing at its mills in the south of the US by 24pc until 6 April at the earliest.

Forestry and wood pellet industries have been declared essential services in most Canadian provinces, including BC, and can therefore continue operating, despite the state of emergency declared by all 10 provinces. But a sharp reduction in sawmill residues could cause issues for pellet producers.

Canadian pellet producers have taken steps over the past year to become less reliant on sawdust for feedstock, after a downturn in the lumber industry caused many timber firms to cut output or shut sawmills. But after producers found a new feedstock supply balance and sawmill output began to stabilise in the past few months, further disruptions could prove challenging.

Canadian wood pellet producer Pinnacle Renewable Energy "has built inventories of feedstock to mitigate the impact [of the coronavirus outbreak] and will continue to work hard to source harvest residuals", it said.

Pinnacle — the world's third-largest pellet producer with production capacity of 2.2 mn t/yr — has worked to diversify feedstock supply sources over the past year, including a wider range of harvest residuals. This includes upgrade work at some plants to ensure equipment can process more varied feedstock, or residuals with more moisture.

Pellet producers can access forests directly for feedstock, even if forest residuals require additional processing. The key question is whether it will be sufficient. While pandemic-induced uncertainty emerges in some supply regions, European demand for industrial pellets will remain strong.

By Georgia Gratton