The first of B.C.'s three forestry majors released third quarter financial results Thursday that confirm an "unprecedented" surge in lumber prices this summer that has reversed some of financial losses in the latter part of 2019 and earlier part of 2020.
Canfor Corp. (TSX:CFP) reports operating income of $347 million for the third quarter of 2020 -- a $289 million increase over second quarter earnings.
Its pulp division, on the other hand, reported a loss.
In the latter part of 2019, B.C. forestry companies began permanently shutting down sawmills and curtailing production at others. They cited falling lumber prices and high stumpage costs for the curtailments and closurers.
The COVID-19 pandemic appears to have also tightened the lumber supply in North America, as some North American sawmills were forced to temporarily shut down. The result of production curtailments, in concert with an increasing demand for lumber in the America's housing market, has resulted in a dramatic spike in lumber prices, with prices exceeding US700 per 1,000 board feet this summer -- double what prices were in the spring of 2020.
"Adjusted lumber segment results of $387.4 million, an all-time record, were up more than five-fold quarter-over-quarter, as a significant surge in demand outpaced available supply in the current quarter, following widespread industry curtailments earlier in the year in response to the coronavirus... outbreak," the company reports.
Canfor's share prices have more than doubled from this year's nadir -- $6.15 per share on March 23 - to $16.63 on October 22.
Canfor Pulp (TSX:CFX), meanwhile, reported an operating loss of $28 million for the third quarter.
The company cites "weak global pulp market conditions as well as significant fibre-related and previously deferred scheduled maintenance downtime, stemming from the ongoing impact of the coronavirus .. combined with a 3 cent, or 4%, stronger Canadian dollar" for the loss.
B.C.'s two other major publicly traded forestry companies will release their third quarter results in the coming weeks.
West Fraser Timber (TSX:WFT) will release its third quarter financials October 27, and Interfor Corp. (TSX:IFP) will release its financials November 5.