It may be only the size of a grain of rice, but the mountain pine beetle has left a swath of destruction in British Columbia, infecting or killing enough lodgepole pine to cover the province of New Brunswick twice over.
Supply has dropped, mills have closed and jobs have been lost. But despite the troubles, there are those who are confident the longer-term view of the industry remains promising.
Following a gradual tailing off in the early part of 2011, lumber prices climbed in the latter part of the year and while there are short-term risks due to the North American economy, B.C. mills are well positioned in the medium term.
That outlook is buoyed by insatiable growth in Asia and confidence that a depressed American market will one day rebound. The current health of the industry is largely due to China, where B.C.’s sales to the Asian country surpassed $1 billion last year, a 60% increase over the previous year. Only the U.S. remains a larger market for Canadian lumber with a market share of 42%, while China now accounts for 32%, with Japan being the third-largest market for B.C. lumber.
While there may be fewer mills than before the pine
beetle infestation, those that remain are investing in the future, such as Western Forest Products’ recent announcement of a $200 million capital upgrade program that includes $16 million for a retrofit of its Saltair Mill in Ladysmith on Vancouver Island that will see productivity increase by 15%. The company points directly to the expansion of the Asian market as part of the reason for making the capital investment (see full report on page 47).
Another sign of optimism is Canfor’s commitment of nearly $40 million in its Radium Hot Springs sawmill, which is slated for reopening in November of this year. The mill improvements, which include the building of a new planer mill, conversion of the energy plant from running on propane to bioenergy, along with sawmill upgrades, will allow production to ramp up to 240 million board feet (for the full project report, see article on page 52).
The most recent report from International Wood Markets Group (forecasts demand and prices improving in 2014 and 2015, which may help to boost bottom lines and perhaps open up timber options, previously deemed uneconomical. It also predicts stronger demand and rising U.S. housing starts, creating what it calls a “super cycle” of tighter timber and lumber supplies tied to improved demand in North America and Asia.
After the past few years of being double-teamed by the beetle and the economy, it is certainly nice to hear a little good news.
That makes for good timing to take over the helm of this 131-year-old institution known as Canadian Forest Industries.As the new editor, I look forward over the coming months to getting out and meeting as many of you as I can in the industry.
And you can look forward to some exciting news from us. By the time you receive this issue, we will have launched an all-new digital presence at www.woodbusiness.ca. The site features regular news updates, web exclusives, magazine archives, full feature reports, events, local weather, video, and more. Be sure to revisit the site after DEMO 2012, when we’ll have show news and live video of all the action and new gear.
Woodbusiness.ca also allows access to our brand new weekly e-news, the easiest way to keep pace with changes and news in the industry. Sign up today.
For the coming months look for an all-new magazine design, the launch of our Twitter feed for daily news, and perhaps some local educational events. This is our way of gearing up for the recovery. I hope you enjoy.
John Tenpenny, Editor
August 15, 2012 By John Tenpenny
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