Canadian Forest Products Corporation (Canfor) has reported a second quarter net income of C$26.2m (2010: C$43.7m).
The company’s net sales were C$619.1m (2010: C$634.7m).
Canfor said in addition to poor demand levels, increased lumber market inventories, in part due to weather- related overhang from the first quarter, contributed to a steep drop in North American lumber prices early in the second quarter.
Prices bottomed out in May and were followed by a modest recovery before the end of the quarter in response to more balanced inventory levels.
The average Western SPF 2×4 #2&Btr benchmark price for the quarter was US$240 per Mfbm, down US$56, or 19%, from the previous quarter, although decreases for wider dimensions were less significant.
Lumber sales realizations from offshore markets, where prices are negotiated monthly or quarterly in advance, saw relatively minor decreases.
Canfor’s lumber shipment volumes rebounded after weather-related transportation constraints in the first quarter, increasing by 14% to just under a billion board feet for the quarter, with increased demand from China also a major contributing factor.
Lumber production levels were up 4% from the previous quarter, with second quarter productivity improvements at various mills having a positive impact.
“We are seeing several positive indicators in lumber markets, especially Asia where we shipped record high volumes in the quarter,” said Canfor’s President and CEO, Don Kayne.
“That said, a sustained recovery of lumber markets and prices will not begin until there is a turnaround in the U.S. economy, and particularly the housing sector.”
