Canfor Pulp Products Inc. (TSX:CFX) is extending a curtailment at its Intercontinental pulp mill in Prince George, due to a lack of fibre.
It’s one of several pulp or paper mills in B.C. to announce either temporary, indefinite or permanent curtailments in recent months. West Fraser Timber Co. Ltd. (TSX, NYSE: WFG) also recently announced a 16-day curtailment at its Cariboo Pulp and Paper mill in Quesnel.
Canfor shut down operations at its Prince George pulp mill on September 24 for annual maintenance. But the two-week maintenance shutdown is now being extended, and the mill is not expected to resume production now until October 24.
While recent paper mill curtailments can be blamed at least in part on declining markets for traditional paper products, curtailments of pulp mills are not related to pulp prices, which are at record highs. Supply chain issues related to rail capacity, and the lack of fibre are mainly behind recent pulp mill curtailments in B.C.
“In total the four weeks of downtime is reducing Canfor Pulp’s production output by approximately 28,000 tonnes of market kraft pulp,” Canfor said in a press release.
“Despite strong global pulp markets, we are experiencing a shortfall of economic fibre in British Columbia,” Canfor Pulp CEO Kevin Edgson said in a news release.
“The fibre for pulp mills is increasingly constrained due to the impacts of the decreasing allowable annual cut, the end of the Mountain Pine Beetle epidemic, wildfires and reduced sawmill capacity in the province. We regret the impact of the downtime on our employees and are working to support them through this time.”
Pulp mills everywhere are currently struggling with high fibre costs, but it’s particularly pronounced in B.C. where basic inputs – sawmill waste and pulp logs – are getting harder to come by.
“Strong global demand and record high prices for wood pulp have kept the wood chip trade close to the highest levels ever recorded,” Wood Resources International recently reported.
“A combination of record high prices for market pulp, low pulp inventories, and tight wood fiber supply have pushed costs for pulp logs and wood chips higher in both local currencies and U.S. dollars in the past year.”
As BIV News recently reported, it’s estimated that by the end of this year, B.C. pulp production could be down by 13% and paper production down by 58%.
The fibre shortage is getting so severe that two to three pulp mills could shut down by Christmas, according to Joe Nemeth, project manager for the BC Pulp and Paper Coalition.