VANCOUVER (Reuters) - A recent run-up by Canadian forestry stocks has investors in the downtrodden sector basking in a warm glow, but that could fade as quickly as it appeared if the industry returns to its self-destructive tendencies.

Higher prices for pulp, lumber and oriented strand board have boosted shares of companies like Domtar Corp, up 415 percent from a year ago, Canfor Pulp Income Fund , up 521 percent, West Fraser Timber, up 73 percent and Canfor Corp , up 105 percent.

Lumber prices are at four-year highs, which will allow a cut next month in the export tax Canadian companies pay on shipments to the United States.

That will mark the first time the tax rate, designed to restrict Canadian lumber during weak markets, has gone down since the Canada-US softwood trade agreement was signed in 2006.

But with US housing construction still weak, the higher lumber prices are being attributed to inventory re-stocking at a time when supply is constrained because of years of sawmill shutdowns in both Canada and the United States.

Therein lies the quandary for investors: Will producers keep the good times rolling by showing restraint, or will they try to cash in for short-term profit and restart some of the idled production, as they have in the past?

"If you're asking me, do I think there will there over-production, the answer is, probably yes," said Paul Quinn, an analyst at RBC Capital Markets in Vancouver.

Kevin Mason of Equity Research says he recently heard a chief executive lament the industry's traditional lack of supply discipline. Not long after that, the same CEO's company announced it was preparing to restart a long-idled mill.

Quinn cautions the sector's fragmentation makes it difficult to predict or restrict production. For every public giant like West Fraser or Canfor there are many more private single-mill producers.