Wed. Feb 28th, 2024

Québec sawmills have not been profitable for a year

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The profitability of sawmills is closely linked to the construction and construction starts sector.


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Quebec sawmills have not reached their break-even point for more than a year due to the drop in demand for lumber, which is causing prices to decrease compared to those recorded during the pandemic .

After seeing record values ​​of US$1,500 per 1,000 board feet (PFM) in 2021, lumber prices plunged in 2022 after the pandemic. It currently hovers around $575 for the same quantity, which is clearly insufficient to ensure the profitability of sawmills.

A foot board measure (pmp ) is equivalent to a piece of wood 12 inches long by 12 inches wide by 1 inch thick.

This difficult economic context has pushed some sawmills to temporarily interrupt their activities in 2023 to limit deficits. This is particularly the case for Scierie Saint-Michel, located in Lanaudière. This company has since returned to business, but is currently operating at a loss, despite operating at full capacity.

The entire forestry industry has been at a loss since the beginning of 2023. It is much more a management of operating costs that we are doing to limit losses currently, explains its CEO, Jean-François Champoux. He fears he will have to take [radical] actions in the next year to adapt to the situation.

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Jean-François Champoux, director of Scierie Saint-Michel, located in Lanaudière, maintains that the forestry industry has been operating “at a loss” since 2023 .

The profitability of sawmills is closely linked to the construction and construction starts sector which, in turn, is influenced by interest rates. interest. These have tripled in the last two years.

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Francis Cortellino, an economist for the Canada Mortgage and Housing Corporation, maintains that housing starts fell by 32% in 2023 in Quebec, while Canada buys more than half of the wood produced in the province.< /p>

When interest rates are high, financing conditions are difficult and projects that were previously profitable are no longer profitable, so projects are delayed, projects are canceled, which makes it there are fewer construction starts, he specifies.

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Many criticize the lack of housing and the slow pace of housing starts in Canada. (Archive photo)

This is an observation shared by Mr. Champoux. During the pandemic, we had a lot of consumption and renovation too. Currently, we have a market that is more restricted because interest rates are completely canceling out the construction market.

However, some remain optimistic for 2024 and believe that a drop in rates will increase the number of housing starts in the country. Moreover, the Bank of Canada already announced on Wednesday that it was maintaining its key rate at 5%, adding that it had started discussing when it would lower its rate.

< p class="StyledBodyHtmlParagraph-sc-48221190-4 hnvfyV">For the director of the Quebec Forest Industry Council, Jean-François Samray, economic recovery will inevitably take place this year since the United States will also reduce their rates.

The year 2024 promises to be a good year in the recovery of the markets. The US Federal Reserve has already indicated that March should be the month when rate cuts will arrive, says Mr. Samray.

With information from Élyse Allard

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