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Beetle Plague Pushes Canadians to Stock-up on U.S. Lumber Mills

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According to a report this week by Bloomberg News, New York City, N.Y, USA, In the 60 years since Bob Jordan III joined his family’s North Carolina sawmill business, he hasn’t seen anything quite like the Canadian invasion of the U.S. South’s lumber industry.

Western Canadian lumber producers have good reason to be looking to the southeast corner of the continent. Chased from their home forests by rising costs and a plague of tree-killing beetles, West Fraser Timber Co. Ltd., Canfor Corp. and Interfor Corp. have been on a buying spree, doubling the number of mills they own in the South since 2009 to about 34. The Canadians are drawn by the region’s 210 million acres of fast-growing forests and expanding housing markets from Texas to Virginia to Florida, according to Brooks Mendell, president of Forisk Consulting, an timberland researcher based in Athens, Ga.

Since the late 1990s, the grain-of-rice-sized mountain pine beetle has attacked and killed more than 700 million cubic meters of pine trees in the inland forests of British Columbia, Canada’s top lumber-producing province. That’s equivalent to about 700 million standard telephone poles.
 
 

"The current estimate is that 60% of mature pine in B.C. has been killed or will be killed by the end of the decade," Rodger Hutchinson, a West Fraser vice-president, said June 5 in a Bloomberg Television interview in Vancouver.

Warmer winters, a result of climate change, allowed beetle populations to get out of control in B.C.’s lodgepole pine forests, as well as in neighbouring Alberta and parts of the U.S. west. While B.C. sought to halt the outbreak, it also encouraged lumber makers such as West Fraser and Canfor to accelerate harvesting to get the value out of the dead trees before they rotted.

"For B.C. lumber producers to stay in the lumber business, they really have to purchase mills in areas that have fiber," or raw timber, Paul Jannke, a lumber specialist at Forest Economic Advisors in Westford, Mass. USA, said June 11 by phone.

While West Fraser helped lead the Canadian charge into the U.S. South, Vancouver-based Interfor has been especially active this year. Billing itself as the world’s fastest-growing lumber maker, Interfor last week completed the purchase of a mill in Monticello, Ark. It was the third southern mill the company acquired this year, raising its total to nine.

"Fibre supply is why the Canadians are going down South," Paul Quinn, a Vancouver-based analyst at RBC Dominion Securities Inc., said in the interview,.

Pine trees in Canada take 60 to 80 years to grow to maturity, while southern yellow pine typically goes from seedling to the lumber mill in about 25 years, according to Mark Kennedy, a Calgary-based analyst at CIBC World Markets.
 

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