Florence Spurs Closures of Lumber, Paper Mills in Carolinas

(Bloomberg) -- Hurricane Florence forced lumber and paper mills in the Carolinas to close temporarily as strong winds and a deluge of rain hit the coast.

Major lumber and paper mills are in the Category 2 storm’s path, and producers are racing to secure equipment and sites as Florence makes landfall, said Ewell Smith, executive director of the Carolina Loggers Association. Lumber futures rebounded from a 12-month low as companies from Domtar Corp. to Canfor Corp. shut facilities that may suffer damage.

“It’s a massive threat” with the industry accounting for $29 billion in North Carolina’s economy, Smith said in a telephone interview. “We don’t know what the impact will be.”

Canfor, one of Canada’s largest lumber producers, closed its Conway and Darlington mills in South Carolina and is encouraging all employees in the hurricane’s path to evacuate, spokeswoman Michelle Ward said in an email.

Domtar Closures

In South Carolina, Domtar closed the Marlboro paper mill and the Tatum converting site, along with the Plymouth, North Carolina, pulp mill, and operations will resume as soon as “it is safe to do so following the storm,” spokesman Stefan Nowicki said in a statement.

The company is monitoring the weather closely for “potential impact” to other operations in South Carolina and Georgia, he said. Domtar has plans in place to minimize the potential impact to customers.

International Paper Co., the world’s largest paper producer, has facilities in the Carolinas. Spokesman Tom Ryan said the company will disclose any storm impact if it occurs.

A lot of mills “are really in the eye of the storm,” said Bernard Rose, operations manager of fiber supply at KapStone Paper & Packaging Corp., which closed one of its paper mills in Charleston, North Carolina, and a lumber mill in Summerville, South Carolina.

Lumber futures for November delivery rose by as much as $14.90, or 4 percent, to $388.80 per 1,000 board feet on the Chicago Mercantile Exchange, close to the $15 limit. Earlier, the price touched $367, the lowest since August 2017.

Prices of southern yellow pine and oriented strand board also rose, and “the momentum will likely carry into Friday,” RBC Capital Markets analyst Paul Quinn said in an email. Prices may fall as early as next week if the damage doesn’t “live up to the pre-landfall hype,” he said.

The storm probably will have a bigger short-term effect on oriented strand board and plywood as people board up their windows and doors, said Mark Wilde, an analyst at BMO Capital Markets in New York.

“This has happened in the past, and there are signs that it is occurring on a regional basis as we speak,” Wilde said in an email.

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