Comments on: Lumber prices dropping.

By: markx

markx — Thu, 29 Mar 2007 15:28:00 +0000

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 horizon, with Russia and Brazil ramping up production. In Russia, environmental regulation is weaker. In Brazil, they can grow trees 3 times as fast as BC. Overall, the future doesn't look very good, but most threats have not yet materialized.

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By: Jesse

Jesse — Thu, 29 Mar 2007 12:29:00 +0000

"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.

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By: Freako

Freako — Thu, 29 Mar 2007 10:15:00 +0000

"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 2x4 from this province goes to this or that country is irrelevant. Global demand, global supply and global prices are what matters.

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By: Warren

Warren — Thu, 29 Mar 2007 09:24:00 +0000

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.

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By: Drachen

Drachen — Thu, 29 Mar 2007 09:14:00 +0000

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.

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By: duck

duck — Thu, 29 Mar 2007 06:30:00 +0000

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.

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By: Warren

Warren — Thu, 29 Mar 2007 06:14:00 +0000

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.

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By: Freako

Freako — Thu, 29 Mar 2007 05:54:00 +0000

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?

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By: markx

markx — Thu, 29 Mar 2007 01:23:00 +0000

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.

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By: stormy petrel

stormy petrel — Wed, 28 Mar 2007 23:20:00 +0000

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% unemployment will be the norm for anything north of Kamloops.The Russian question is nonsense, do the research, there lumber market is not North America.

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