Hank Ketcham, West Fraser’s Chair, President and CEO stated: “In the face of continuing weak lumber markets, the recent rapid strengthening of the Canadian dollar has posed a significant challenge to our business.”

West Fraser's lumber operations lost $27 million,  compared to the  $4 million on the plus side recorded in the  second quarter.  The  difference  is blamed on the Canadian dollar .  At the beginning of  the quarter the Canadian to U.S. dollar exchange rate was 1.07 while at the end of the quarter it was .99. A significant reduction in the price of lumber at the end of the quarter together with the currency exchange fluctuation resulted in lumber and log inventory writedowns totaling $33 million.

Pulp and paper operations generated $26 million compared to $9 million in the previous quarter when maintenance shutdowns affected production. U.S. dollar pulp prices

strengthened during the third quarter but were also offset by the weakening of the U.S. dollar.

Panel operations generated $19 million compared to $12 million inthe previous quarter with the plywood market remaining strong while MDF and LVL markets

weakened.

The current state of North American lumber markets will not improve until material production curtailments occur or the U.S. housing market recovers. Many analysts believe that such recovery is at least a year away. Pulp markets are expected to remain strong in the near term.  However, much of the Canadian wood products industry is unprofitable under current circumstances, particularly given the current level of the Canadian dollar.

“Just as a weaker Canadian dollar masked inefficiencies in the Canadian industry, the very strong Canadian dollar exacerbates these inefficiencies. We will need to become even more efficient under these circumstances,” said Mr. Ketcham.