13 May 2010
British Columbia's forest industry is enjoying a welcome rally but may have to wait until at least next year to blaze into full recovery, forestry experts say. The higher prices fetched by lumber, oriented strand board and pulp at the end of 2009 have spilled into early 2010, leading to better results in the quarter just ended, industry watchers told a forestry conference in Vancouver on Tuesday.
The price of lumber has risen to $305 US per thousand board feet, up 40 per cent from the average price in 2008, the PricewaterhouseCoopers conference heard. Oriented strand board prices are more than 2½-times higher than the 2008 average. Pulp prices, at $965 US a tonne, are up almost 50 per cent from a year ago.
B.C.'s forest sector made $200 million US in 2009, marking the first time it has enjoyed positive earnings since 2005. PricewaterhouseCoopers speakers said the weak economy of the last few years has led to under-supply.
"Supply-side discipline paid off in late 2009 and early 2010 as a slight increase in demand meant that the supply could not meet demand and the price of lumber has been increasing as a result."
Frederic Bouchard, a managing director with PWC, warned that the supply side, not demand, has also been driving pulp prices. Pulp prices will decrease once Chilean pulp mills affected by a recent earthquake are back online, he said.
"While we have seen some signs of relief in early 2010, the underlying fundamentals for growth are not yet there for the forest and paper industry. We anticipate that there could be a slight decline in this rally before a full recovery in 2011 or 2012."
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