Canadian Mill Output Falls 16.6%; Supply Tightens

Impact on Your Procurement Strategy

The key takeaway from the December Canadian production data is proactive supply discipline. Statistics Canada reported that lumber production declined a substantial 16.6% month-over-month in December, falling to 3,332.9 cubic meters. While December is seasonally weak due to holidays and weather, this magnitude of reduction signals that mills—primarily those producing SPF (Spruce-Pine-Fir) and Hem-Fir—are deliberately managing inventory to prevent a supply overhang.

This supply contraction has a direct impact on current procurement strategy: it acts as a strong floor beneath pricing. Buyers who were holding out for significant price dips in Q1 should temper those expectations. The 16.6% drop in production, coupled with a 2.4% year-over-year decline, effectively absorbed much of the potential downside price risk that would typically accompany weak winter demand. For procurement managers, this suggests the current price levels offer stability and likely represent the floor for the short term.

The shipment data reinforces the supply tightness. Canadian sawmills shipped 21.4% less lumber in December than in November. This substantial reduction in flow means that replenishment cycles for US distributors, especially those in the Northeast and Midwest relying on rail-delivered SPF, will be slower heading into spring. Buyers should anticipate slightly extended lead times (potentially 1-2 weeks) for specific high-demand items like SPF studs and 2x4 dimension lumber, particularly if Q1 US housing starts accelerate.

Risk management now pivots from protecting against price depreciation to ensuring availability and mitigating future price inflation. If US housing demand improves as expected in Q2, the market will rapidly feel the pressure from this intentionally constrained Canadian supply base. The window of stable pricing is optimal for securing critical inventory (e.g., 30-45 days of 2x4 and 2x6 SPF) needed to service initial spring construction orders. Delaying purchases based on expectations of further price drops is now a higher risk strategy given the significant mill curtailments reported.

Key Takeaways

• Leverage stable pricing now; the 16.6% production drop removes immediate downside risk, meaning current prices are likely near the floor for Q1.

• Anticipate tighter SPF availability; the 21.4% drop in December shipments will delay replenishment cycles for distributors relying on Canadian loads.

• Monitor Q1 US demand signals closely; if US housing construction ramps up, this curtailed Canadian supply will lead to faster price appreciation.

• The 9.0% YoY shipment decline confirms consistent discipline, limiting the risk of a Q2 supply surge from Canadian sources.

Market Outlook

Pricing Trend: STABLE Confidence Level: MEDIUM Recommended Action: Given the aggressive 16.6% reduction in Canadian supply, use the current STABLE pricing window to secure 30-45 days of SPF inventory. This mitigates availability risk if US housing starts accelerate in late Q1/early Q2.

How LumberFlow Helps

When Canadian mill production drops by 16.6%, lead times become volatile and pricing stability is crucial. LumberFlow's multi-supplier RFQ system allows procurement teams to rapidly compare availability and delivery windows across multiple regional and international suppliers, ensuring continuous supply despite mill curtailments. Use automated price alerts to track SPF pricing consistency during this supply-tightening period.

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