Prior to the coronavirus pandemic, the Canada rail blockades stood as the major supply chain disruption of the quarter in Eastern Canada. Protests of a pipeline crossing First Nations lands in Western Canada challenged incoming and outgoing rail deliveries for Eastern Canada mills in early Q1. While the blockades caused short-term upheaval, mill closures and  volatility stemming from the coronavirus are poised to have more lasting effects. Softwood residual chip prices in Ontario and Quebec increased 5% in Q1 2020 over Q4 2019. Other product prices either declined or held constant, with softwood roundwood in the Maritimes leading the declines, falling 10% on the quarter.

The closure of Northern Pulp’s Nova Scotia mill was the largest news of the quarter, leaving Port Hawkesbury as the only operating pulp mill in the province. Prices for softwood roundwood dropped as sellers adjusted to the new demand situation, but the impact continues to ripple out across the region. Loggers reportedly shifted to hardwood sites where possible to avoid pricing impacts to softwood, increasing hardwood availability as well. Supply flooded to Port Hawkesbury just as the coronavirus dampened the world’s economy, leaving the pulp mill woodyard full and sawmills in the region with no place to sell residuals. Now all but one sawmill in the region, JD Irving‘s Truro mill, have reportedly either closed their gates or have announced intentions to do so.

Further west, pulpmills in Ontario and Quebec secured longer-term supply agreements for residual chips, increasing Q1 2020 prices as mills in both provinces face increased competition from pellet producers. Three new pellet plants started in 2019, tightening the supply of residuals in the region. The scheduled 2020 restart of Nordic Kraft’s Lebel-sur-Quevillon, Quebec pulp mill also looms over the future supply situation. As with all announcements in the current economic environment, it remains to be seen what effect, if any, the coronavirus may have.

This post contains a sample from the Q1 2020 Forisk Wood Fiber Review. Click here to learn about the Forisk Wood Fiber Review (FWFR), tracking pulpwood, wood chip and biomass markets in the U.S. and Canada since 1983.