The average North American benchmark Western SPF 2x4 #2&Btr price rose US$56, or 17%, to US$391 per Mfbm, and ended the quarter at US$408 per Mfbm, the highest level since early 2005. Most other dimensions and grades saw solid, but slightly lower, gains during the quarter. Offshore prices also trended higher with prices on shipments to China reaching new record-highs. Prices for SYP products saw strong increases through the quarter as well, with the benchmark SYP 2x4 #2 average price moving up US$66, or 17%, to US$452 per Mfbm. Western SPF sales realizations also reflected the positive impact of no export taxes on U.S. bound shipments and a weaker average Canadian dollar, down 2 cents, or 2% from the previous quarter.
Lumber production, at just under 1.2 billion board feet, was up 8%, or 92.5 million board feet, from the previous quarter, reflecting a full quarter of production from the Company's recently restarted Radium mill and overall improved productivity, as well as the impact of the Christmas period in the previous quarter. Lumber unit manufacturing costs were in line with the previous quarter, with a reduction in unit conversion costs reflecting higher production levels, offset by a modest increase in unit log costs largely resulting from higher market-related stumpage and increased hauling costs.
Global softwood pulp pricing saw modest price increases through the current quarter with Northern Bleached Softwood Kraft ("NBSK") average list prices up US$15 to US$30 per tonne in all regions. The average list price for North America was up US$34, or 4%, to US$897 per tonne for the quarter. Overall sales realizations did not, however, match the full list price increases due to increased volume to lower-margin regions, principally China, but were favourably impacted by the 2% weaker average Canadian dollar.
The Company's pulp shipments were up 5% from the previous quarter, principally reflecting higher shipments to China. Pulp production was up slightly from the previous quarter, for the most part reflecting an improvement in operating rates during the quarter. Reduced pulp unit manufacturing costs in the current quarter were largely the result of lower maintenance costs coupled with the increased production levels, partially offset by seasonally higher energy costs and slightly higher fibre costs.
The Company continued to preserve its strong financial position, ending the quarter with net debt to capitalization of 18.8% and $400 million available under its operating loans. On April 1, 2013, the Company repaid its US$75 million 5.42% term debt using its operating loan facility. During the current quarter, the Company extended the maturity on its $350 million principal operating loan facility from October 2015 to February 2018.
Commenting on the first quarter performance, Canfor's President and CEO, Don Kayne, said, "We are encouraged by the stronger lumber markets and steady improvement in the U.S. housing market. Global pulp markets improved slightly as we saw some modest upward movement in prices ahead of the seasonally stronger spring period." Kayne added that the Company's lumber and NBSK pulp mills saw significant uplifts in productivity as the quarter progressed. "We are seeing positive results from the significant capital improvements we have made in the last few years," said Kayne.
Looking ahead, North American lumber consumption is forecast to improve slightly through the balance of 2013 as U.S. housing activity continues to gradually gain momentum. Canadian markets are anticipated to remain relatively slow due to tempered housing activity, while offshore markets are projected to see modest growth in demand and stable prices. NBSK pulp markets are projected to remain fairly challenging through the second quarter of 2013. Canfor Pulp announced an increase in the North American NBSK pulp list price of US$30 per tonne in April 2013.
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