It looks like we may not be totally immune to the housing market woes in the US – In the previous thread Freako posted this link: Lumber prices are down almost 25% from a year ago. How much of the BC economy is based on wood trade with the US?
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From freako: "Global demand, global supply and global prices are what matters."Well, lumber is not exactly like oil, where a country that doesn't export oil to US directly influences the price of oil in US. The effects of both US housing slowdown and Russian log export on BC are kinda complicated. US largely buy lumber from Canada, and they are pretty much the only buyer of BC lumber products, as people tend to build homes with bricks in Asia. Major competitor for BC lumber seem to be US producers only. On the other hand, China mostly imports pulp from BC, for its paper industry. On that front, North America is competing with Scandinavia, Brazil, and Russia. So far, global price of pulp have been holding, likely due to high energy prices. Although potential flood of supply is looming in the… Read more »
"I would call 64% exposure a lot less than immune."The BC Liberals disagree with you according to their latest budget. Very little was devoted to downturn risk and how it would affect what they could spend.
"Interesting. We're not immune to the US economic situation by any means, but we are better diversified that other areas of the country."I would call 64% exposure a lot less than immune. But whether this 2×4 from this province goes to this or that country is irrelevant. Global demand, global supply and global prices are what matters.
Good link drachen, some choice quotes:"The shift in the composition of British Columbia's commodity exports parallels a switch in their destination. Since 2001, the US share has fallen from 70.0% to 64.0%, while Asia has jumped from 20.5% to 24.0%. As a result, British Columbia is less dependent on the American market than the rest of Canada. Conversely, its orientation to Asia is nearly five times greater than the 5% in the rest of Canada."Interesting. We're not immune to the US economic situation by any means, but we are better diversified that other areas of the country.I looked up BC Stats and came up with this historical GDP link:GDP by industryAdding up the categories related to forestry and wood processing I get about $10.5b out of a total 131b GDP.
Ok, let's get some stats.as of 2005 forestry accounted for approximately 14 billion in exports from BC and other exports were at 22 billion and the gap was increasing. BC Economy article on StatscanI was going to go through a few more statscan articles to find good info but I have work to do today, there's lots of good stuff and it's pretty unfiltered if you want to look for yourself.
stormy wrote "The Russian question is nonsense"Is this a proclamation? 'Cause it sure ain't anything even remotely resembling a comment that induces one's mind to a greater understanding of the issues.
stormy petrel:The number one above ground industry here is forestry. 50% of all the BC economy activity is forestry based.Do you have some real stats to back that up? It seems quite ridiculous.If by "forestry based" you mean that because our houses are made of wood and our economy runs on paper based money, you may have something.
What are pulp/paper prices doing? I read recently that they are currently near all-time highs. What % of the forestry market is pulp?Correct me if I am wrong, but isn't aren't the wood chips that are turned into pulp a byproduct of attaining lumber, at least in part. I doubt we put the good stuff into paper. AFAIK we don't have stands of fast growing decidous in B.C. that are turned into pulp. If I am right, and lumber and pulp prices diverge, won't that leave B.C. short of wood chips?
The pulp and paper industry in North America has been declining for a few decades, but recently BC pulp and paper industry is doing OK. A few mill closures here and there, but nothing dramatic. Catalyst was recently taken over by private equity, if I read it correctly. Overall the biggest risk seem to be on the lumber front, while pulp and paper is surviving despite the permanent doom and gloom within the industry.
Good eveningI believe the question of how much lumber [and logs] we export to the US [85%] and the corresponding silly answers is a disappointing display of a complete lack of knowledge of BC economics. The number one above ground industry here is forestry. 50% of all the BC economy activity is forestry based.The coast forestry has been destroyed [log export] by the federal conservatives and there imposed soft wood lumber agreement. The interior forestry is on a path to a trade and industry catastrophe. The pine beetle kill has left timber that is not merchantable, that is to say the trees are not salvable due to Checks. The high speed mils can process timber with one check but 2 renders but splinters. The 10-15 year window has closed early.3 years is the outside for the interior forestry. Then 30%… Read more »
What are pulp/paper prices doing? I read recently that they are currently near all-time highs. What % of the forestry market is pulp? Here is the (2003) answer. 42% of exports in $ terms was pulp/paper. It is likely that % is higher now.
Considering his research goes back to the early 90's, it's interesting that Harry S. Dent (the demographics guy) was only one year early with his call of the North American RE collapse.
"The good news is, Canada's forests should be back to normal in "171 to 190 years"."…assuming all this global warming stuff will blow over.
To "some temporary mill closures" you may want to add just a few of these permanent closuresHey, not to worry, we can put twice as many people to work building condos on the sites and selling them to the rich Albertans, Olympic spectators, etc…..
……. It can't happen here right?
warren,To "some temporary mill closures" you may want to add just a few of these permanent closures (some of which have already been demod.) that someone posted on Chipmans blog a few weeks ago:Silvertree – VancouverWhite Pine – VancouverEvans Products – VancouverFlavelle Cedar – Port MoodyHammondFraser MillsInterfor – SquamishIsland Phoenix – NanaimoMayo – NanaimoWestern – TahsisWeyerhaeuser – VavenbyWeyerhaeuser – KamloopsAnd here's another one (the Queensborough mill) that shut down permanently just 3 weeks ago, although it was quite small compared to some of the others, as it only employed about 300 workers.
tulip-mania,If you don't mind, could you get Gordon to autograph this image?
Not to worry about the BC lumber industry. I am having my usual spring garden party with my friend Gordon, along with the cabinet, (a few years ago, I would have hoped Carol could stay behind, a little longer than the rest of the cabinet), but that aside, we will be discussing a way out of this quagmire. Soon we will have a glut of lumber, and a glut of construction workers, and yet we have an affordability problem.The solution is to put into place a program to use all the surplus resources to work, the downside:Substantial drop in inflated real estate values in the lower mainland, but we are cool with it, the voters, and homeowners in the rest of the province won’t mind a bit.PS. Do you guys and gals, have any messages you would like me to… Read more »
mold,See the rather gloomy article in today's Edmonton Journal:"One report cited in the study says that within five years, beetle-killed stands start falling over, with up to 50 per cent of trees fallen within nine years and 90 per cent knocked down after 14 years."The good news is, Canada's forests should be back to normal in "171 to 190 years".
MoldIts a huge deal and the predictions you've heard or read about are accurate. The pine beetle infestation is spreading South, well beyond the areas originally predicted and at a faster rate. In addition, recent findings indicate that there are more threats to the integrity of wood fibre, pre and post milling, than originally assumed. The industry will survive however it will go through a period of contraction before its next period of expansion.
Whats the deal with the pine beetle problem? I remember reading somewhere that there's 5 or so years left to rip out that wood and then a bunch of jobs disappear and mills close down. I guess the pine beetle damaged wood has to be used up before it gets too bad. Does anyone know if there's any accuracy to that? I've heard conflicting stuff that the pine beetle thing is not a big deal or that its a huge deal that will change forestry in BC.. I'm guessing the truth lies somewhere in between?
"It will only get worse. U.S. suppliers are looking for more and more lumber from the USSR, who aren't (I'm guessing) so committed to environmental issues as we are."An article in the March 13 issue of Business in Vancouver has some interesting things to say about the Russian forest industry. The article is only available to subscribers, but the gist of it is"Moves in Russia to create a modern forest industry could open the door for increased demand for B.C. softwood logs and spur demand for its solid wood products.A new export tax on Russian logs is set to be in place by July and could rise as a high as 80% by 2009, curtailing exports by Russian producers and forcing Asian buyers to look elsewhere for their supply."It's too soon to tell whether this will make us less dependent… Read more »
Wow Great chart. Very intersting info as well from Jhonny Rent. This is unfortunate for all the folks that will lose jobs. I wonder when the impact of the US housing meltdown will have stong effect on our market?
But we been told that we're special…..World ClassOlympicsReal Estate is local market drivenStrong EconomyWe're different from the USIt's different this timeOops……trouble ahead?
It will only get worse. U.S. suppliers are looking for more and more lumber from the USSR, who aren't (I'm guessing) so committed to environmental issues as we are:http://tinyurl.com/yuvfadSo if and when the US housing market does recover, there's no guarantee they'll be buying BC lumber