Conifex to curtail Mackenzie operations for four weeks

Executive Summary

• Conifex Timber Inc. will temporarily curtail operations at its Mackenzie, B.C., sawmill for a planned four-week period starting December 15, 2025, to minimize operating losses amid weak North American lumber markets.
• The curtailment is expected to reduce production by approximately 13 million board feet, driven by declining SPF prices, high interest rates, and increased countervailing and anti-dumping duties on Canadian softwood lumber.
• Management remains optimistic about medium-to-long-term fundamentals, citing structural housing undersupply and industry-wide curtailments that have lowered production to a decade low, expecting demand recovery in the second half of 2026.

Key Details

• Operational Action: Temporary curtailment of operations at the Mackenzie, B.C., sawmill.
• Duration: Four-week period commencing December 15, 2025.
• Production Impact: Expected reduction of approximately 13 million board feet.
• Market Drivers:
  • Sharp decline in benchmark western SPF prices.
  • Slowdown in new residential construction and soft repair-and-remodel activity.
  • Elevated interest rates.
  • Increased countervailing and anti-dumping duties on Canadian softwood lumber shipped to the U.S., which have significantly compressed cash margins and caused operating losses for many producers.
• Strategic Outlook:
  • Belief that structural housing undersupply in the U.S., aging housing stock, and improving affordability (as interest rates normalize) will support gradual demand recovery beginning in the second half of 2026.
  • Industry-wide curtailments have driven North American lumber production to its lowest level in a decade, expected to help rebalance inventories and support sustainable pricing.
• Government Support:
  • Conifex has advanced applications for the large enterprise tariff loan program and the Business Development Bank of Canada (BDC) loan guarantee program.
  • CEO Andrew McLellan emphasized that swift implementation of these federal programs is critical to stabilizing operations and protecting employment.
• Operational Resilience: Power generation operations and a competitive log cost structure at Mackenzie continue to provide support during this period. The Mackenzie TSA has the highest sawlog surplus of any TSA in the Interior region of B.C., ensuring future sawlog security once operations resume.

Notable Quotes

• "While the decision to reduce our year-end operating schedules was difficult, and we regret the impact this will have on our employees, their families and the community, we are encouraged by the fact that the Mackenzie TSA has the highest sawlog surplus of any TSA in the Interior region of B.C." — Andrew McLellan, President and Chief Operating Officer.
• "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." — Andrew McLellan.