BC Mill Assets Sale: Supply Watch Through Q2 2025

Impact on Your Procurement Strategy

The initiation of the sales process for San Group assets on January 17, following their November 29 creditor protection filing, moves the situation from uncertain operational distress to a formal transfer of ownership. For dimensional lumber buyers, this is primarily a supply friction event localized in the Western Canadian market.

San Group owes substantial debt, approximately CA$110 million to Royal Bank of Canada and CA$40 million to Business Development Bank of Canada. While the debt itself is not your direct concern, the process of recouping this CA$150 million means the assets must be sold quickly and efficiently. The mills involved, particularly the Port Alberni sawmills, are significant regional producers, often contributing higher-grade SPF and Hem-Fir products to the US market. Any disruption or slowdown in production during the transition period—from now until the final closing date—will directly impact the availability of these specific product lines.

The critical window for buyers is Q2 2025. The monitor, Deloitte Restructuring Inc., aims for agreements with potential purchasers by May 30, with court approval around June 16, and final closing dates scheduled no later than June 30. This period of transfer creates maximum risk. If the assets are sold to a buyer who plans immediate restructuring or temporary shutdown for integration, that capacity is temporarily removed from the supply pool. This pressure is compounded by existing structural curtailments in BC driven by high fiber costs, adding further instability to Western Canadian SPF and Hem-Fir pricing.

While the market for standard dimensional lumber (e.g., 2x4 #2&Btr SPF) is currently dominated by overall US housing demand and interest rate expectations, this sale provides localized upward pressure on specialty grades and longer lengths sourced from the BC coast. Procurement managers should proactively review their Q2 inventory strategy, especially if they rely on these mills for specific products. We recommend engaging alternative suppliers or securing forward contracts now to hedge against potential shortages or price bumps that could occur between May and July. If a strategic, well-capitalized buyer emerges early, the risk diminishes, but until then, plan for temporary supply tightness and potential pricing volatility in regional BC supply lines.

Key Takeaways

• Monitor the sales timeline closely; the May 30 agreement deadline is the key trigger point for evaluating future supply stability from these BC assets.

• Diversify sourcing for specialty Hem-Fir and high-grade Western SPF products now, anticipating Q2 supply friction during the ownership transition period.

• Factor the permanent structural vulnerability of BC coastal supply into long-term inventory strategy; continue shifting reliance towards US South Yellow Pine (SYP) for core dimensional needs.

• The looming June 30 closing date marks the end of the risk window; secure necessary inventory coverage through the end of Q2.

Market Outlook

Pricing Trend: STABLE Confidence Level: MEDIUM Recommended Action: Focus Q1 purchasing on securing Q2 Western SPF and Hem-Fir needs, especially specialty lengths, to mitigate supply risk stemming from the ownership transfer process set to conclude by June 30. Use the period between now and May 30 to identify and qualify backup suppliers.

How LumberFlow Helps

Use LumberFlow's multi-supplier RFQ system to quickly identify and onboard new North American suppliers outside the BC coast region. This ensures supply redundancy and competitive pricing ahead of potential Q2 volatility caused by the June 30 closing date.

Ready to stay ahead of market trends? Book a consultation with our team to see how LumberFlow's procurement platform transforms dimensional lumber buying.