Conifex reported a $900,000 net loss for the third quarter as sagging lumber prices hit the company's bottom line.
From an average US $1,290 per thousand board feet in the second quarter, the price of Western Spruce, Pine and Fir # 2 and better plummeted to US $478 for the third, according to numbers provided in an update released Tuesday.
Lumber production for the quarter totalled 40.1 million board feet - two-thirds of annualized capacity and down from 49 million over the previous quarter.
"The decrease was largely driven by a two-week curtailment in August. This curtailment was necessitated by the combined impact of record high delivered log costs and a collapse in lumber prices following the record high peak in pricing seen in the second quarter," the company said in the update.
Sales of Conifex produced lumber added up to $25.9 million, well down from $80.1 million the previous quarter.
The company recorded $7.1 million worth of sales to BC Hydro from its Mackenzie-based bioenergy plant, up from $4.7 million during the second quarter.
Hydro has the option to “turn down” electricity purchases during periods of low demand by issuing a “dispatch order" and took that step for 61 days in the second quarter. During the third quarter, Conifex sold 53.7 gigawatt hours of electricity, representing 96 per cent of targeted operating rates and in contrast to 50.9 gigawatt hours during the second quarter.
During the third quarter, lumber prices hit a low of US $385 in mid-August before climbing back to US $533.
Looking ahead, the company expects the lumber market to remain strong supported by steady demand from US housing starts and continued strengthening of activities in the repair and remodelling sector. In turn, production at the Mackenzie sawmill is expected to increase to 88 per cent of annualized capacity.
As well, the power plant is forecasted to operate at full capacity.
