Timber Turmoil: Conifex Curtailment Signals Deeper Industry Crisis

VANCOUVER, BC – November 28, 2025 – Conifex Timber’s announcement that it will temporarily shutter its Mackenzie, British Columbia sawmill for four weeks starting December 15th is more than a routine operational update; it’s a distress signal from the heart of Canada's beleaguered softwood lumber industry. While the company cites predictable factors—weak markets and punitive US duties—the move exposes the brutal financial squeeze facing producers and the precarious future of the communities that depend on them. This is not an isolated decision but a symptom of a systemic crisis, forcing executives to make painful choices to ensure long-term survival.

The curtailment, which will pull approximately 13 million board feet of production from the market, is a calculated retreat in the face of overwhelming economic headwinds. For investors and analysts watching the sector, Conifex's action serves as a crucial data point, confirming that the industry's downturn is far from over and that the path to recovery will be fraught with further consolidation and operational pauses.

The Vise of a Cooling Market

Conifex’s press release points to “continued weakness in North American lumber markets,” a diplomatic understatement for the price collapse that has ravaged the sector. The dizzying highs of the pandemic, when the Random Lengths Framing Lumber Composite Price soared above $1,400 per thousand board feet, are a distant memory. Prices have since cratered, struggling to hold the $400 mark for much of the last year. This dramatic reversal is a direct consequence of the very force that fueled the boom: the housing market.

Aggressive interest rate hikes by central banks to combat inflation have slammed the brakes on new residential construction. US housing starts, a primary driver of lumber demand, have been sluggish, particularly in the single-family segment where lumber usage is most intensive. Compounding this, existing home sales have fallen to multi-decade lows as high mortgage rates lock potential buyers and sellers out of the market. This chills the repair-and-remodel (R&R) activity that often provides a stable secondary demand channel. While Conifex expresses optimism for a demand recovery in late 2026, the current reality is one of bloated inventories across the supply chain and demand that has evaporated.

This market vise is forcing producers into a corner. With cash margins compressed to unsustainable levels, continuing full production becomes an exercise in burning cash. The decision to curtail is, therefore, not just a strategic choice but a financial necessity to stanch operating losses and preserve capital for a time when market conditions improve.

A Battle Fought on Two Fronts: Tariffs and Margins

Layered on top of the cyclical market downturn is the chronic, politically inflicted wound of the US softwood lumber dispute. The “countervailing and anti-dumping duties” mentioned by Conifex are the latest chapter in a decades-long trade war that places an effective tax on Canadian lumber entering its largest market. With combined duty rates hovering around 8-14% for many producers, this is a significant and painful cost.

Since the latest round of duties was imposed in 2017, Canadian companies have paid over US$7 billion to the U.S. government. During boom times, these costs could be partially absorbed or passed on to consumers amidst soaring prices. In today’s weak market, however, they are a dead weight on profitability. The duties directly erode already thin margins, making Canadian lumber less competitive and pushing many producers into the red. For companies like Conifex, the duties transform a challenging market into an unprofitable one, making curtailments an inevitable outcome.

This unending trade dispute creates a debilitating level of uncertainty, hindering long-term capital investment and strategic planning. While producers continue to fight the duties through legal channels, the immediate financial burden is forcing them to shrink their operational footprint.

A Plea for Swift Support

Facing this dual crisis, Conifex is turning to Ottawa for a lifeline, highlighting its applications to federal support programs like the Large Enterprise Tariff Loan Program and the BDC Loan Guarantee Program. This is not a novel strategy but an increasingly common one for companies caught in the crossfire of international trade disputes. These programs are designed to provide repayable loans and guarantees to help viable businesses manage the severe cash flow impacts of tariffs, allowing them to maintain operations and protect jobs.

Andrew McLellan, Conifex's President and COO, underscored the urgency of this support, stating, “The recent federal announcement expanding the BDC Softwood Lumber Guarantee Program and providing additional support through the Large Enterprise Tariff Loan facility is an important step, and swift implementation will be critical to capturing the benefits of these programs.”

His statement is a thinly veiled plea. While the programs exist on paper, their effectiveness hinges on timely access to capital. For a company bleeding cash, bureaucratic delays can be the difference between a temporary pause and a permanent closure. The federal government’s ability to act quickly will be a critical test of its commitment to sustaining a cornerstone of Canada’s resource economy.

A Contagion of Curtailments

Conifex is far from alone in its predicament. Its decision is part of a much larger, industry-wide pattern of production cuts that has swept across Canada. Major players like West Fraser and Canfor have announced a steady stream of temporary curtailments, reduced shifts, and even permanent mill closures throughout British Columbia and Alberta over the past two years. Interfor has similarly adjusted its operating schedules in response to market realities.

This wave of shutdowns has driven North American lumber production to its lowest point in a decade. While this supply discipline is necessary to rebalance the market and eventually support a price recovery, it comes at a tremendous cost. For resource-dependent towns like Mackenzie, the impact is immediate and personal. The Conifex mill is a primary economic engine, and a four-week shutdown means lost wages for hundreds of employees, which will ripple through the local economy, affecting everything from grocery stores to service providers.

While Conifex optimistically notes its access to a sawlog surplus in the region, the ability to capitalize on that resource is entirely dependent on a recovery in market demand and a resolution to the trade barriers that make it unprofitable to do so. The company's long-term faith in structural housing undersupply in the United States remains a valid thesis, but navigating the treacherous path from today’s dire conditions to that brighter future requires a level of financial resilience that is being tested to its absolute limit.