WOOD MARKET STATISTICS Including Pulp and Paper
IN
CANADA
2010 Edition
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DATA SOURCES:
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TABLE OF CONTENTS Wood Market Statistics – Canada 2010 ........................................................................................... 1 Canada’s Forest Resource and Forest Industry............................................................................... 2 Canada’s Forest Resource .......................................................................................................... 3 Land Distribution ..................................................................................................................... 3 Forest Certification .................................................................................................................. 5 Forest Harvests ....................................................................................................................... 6 Growing Stock ......................................................................................................................... 8 Timber Supply and Harvest ....................................................................................................11 Canada’s Forest Industry............................................................................................................14 Forest Industry and Employment............................................................................................16 Forest Industry and GDP........................................................................................................17 Forest Products Industry ........................................................................................................18 Wood Products Industry.....................................................................................................22 Canadian Lumber ..........................................................................................................26 Lumber Production & Shipments...............................................................................27 Softwood Lumber Production ....................................................................................28 Softwood Lumber Exports .........................................................................................30 Canadian Panels ...........................................................................................................33 Plywood & OSB Production.......................................................................................34 Plywood Exports........................................................................................................35 Softwood Plywood Exports........................................................................................36 Hardwood Plywood Exports ......................................................................................37 OSB Exports..............................................................................................................38 Particleboard Exports ................................................................................................40 MDF & Fibreboard Exports........................................................................................42 Wooden Furniture Industry.................................................................................................44 Pulp & Paper Products Industry .........................................................................................48 Canadian Pulp Products ................................................................................................52 Pulp Products Production..........................................................................................53 Pulp Products Exports...............................................................................................54 Bleached Softwood Kraft Pulp Exports......................................................................57 Canadian Paper Products..............................................................................................58 Paper Products Production........................................................................................59 Paper Products Exports.............................................................................................61
WOOD MARKET STATISTICS – CANADA 2010 The intent of Wood Market Statistics (WMS) is to provide the readers with quick and relevant statistics on Canada’s forests and the forest industry. Information and topics covered in this document include, but are not limited to, growing stock, timber supply, production and export shipments of various major forest products, as well as employment and the industry’s contribution to the nation’s economy. From the Canada edition, three provincial WMS publications were produced: WMS-British Columbia, WMSAlberta and WMS-Saskatchewan with other provinces to follow.
Compiled by FPInnovations
1
CANADA’S FOREST RESOURCE AND FOREST INDUSTRY
Credit: www.naturallywood.com
HIGHLIGHTS -
Canada remains the world leader in forest certification, with 155 million hectares certified by one or more of three (CSA, FSC and SFI) globally recognized certification standards. In 2009, it was estimated that 680,808 hectares were harvested or 0.231% of the non-reserved forests. Canada’s production and exports of forest products plummeted to new lows yet again in 2009, behind the surging Canadian dollar (coupled with the weak US dollar), slow housing starts in the United States, the global economic meltdown and other challenges.
2
CANADA’S FOREST RESOURCE LAND DISTRIBUTION According to the last results released by Canada’s National Forest Inventory (CanFI 2001), Canada’s total area is comprised of 882.1 million hectares of land and 88.3 million hectares of water. The nation’s forests (310.1) and other wooded land (92.0) make up about 45.6% of its land mass, while the remaining (480.0) is categorized as non-forest land. Canada’s Land Area, hectares Forest and Non-Forest other Land Wooded Land British Columbia 57,910,000 6,337,000 64,247,000 27,397,000 Alberta 27,718,000 8,670,000 36,388,000 25,011,000 Saskatchewan 20,043,000 4,215,000 24,258,000 34,558,000 Manitoba 18,968,000 17,386,000 36,354,000 17,641,000 Ontario 53,758,000 14,536,000 68,294,000 19,816,000 Quebec 73,360,000 11,215,000 84,575,000 48,395,000 New Brunswick 6,091,000 116,000 6,207,000 922,000 Nova Scotia 4,240,000 107,000 4,347,000 930,000 Prince Edward Island 265,000 8,000 273,000 292,000 Newfoundland and Labrador 10,730,000 9,337,000 20,067,000 15,311,000 Yukon 7,884,000 14,906,000 22,790,000 23,808,000 Northwest Territories 28,352,000 4,994,000 33,346,000 78,508,000 Nunavut 815,000 125,000 940,000 187,427,000 Canada 310,134,000 91,952,000 402,086,000 480,016,000 Source: Canada's National Forest Inventory - CanFI 2001. https://nfi.nfis.org/history.php?lang=en Forest Land
Other Wooded Land
Total Land 91,644,000 61,399,000 58,816,000 53,995,000 88,110,000 132,970,000 7,129,000 5,277,000 565,000 35,378,000 46,598,000 111,854,000 188,367,000 882,102,000
Subtracting the reserved forests, Canada has about 294.8 million hectares available for commercial harvest. Of that area, just under half (143.7 million hectares) is subjected to forest management, and of that half, only 0.9 million hectares is harvested annually.
3
Although Nunavut has the largest land area of any Canadian province or territory, forest area in Nunavut is almost negligible. With the exception of the three territories and Saskatchewan, forest and other wooded land represent more than half of each province’s total land area.
Canada's Forest Land vs. Non-Forest Land 200,000 180,000 160,000
Hectares
140,000 120,000 100,000 80,000 60,000 40,000 20,000
Forest and other Wooded Land
N un av ut
or ie s
es t
Te rri t
Yu ko n or th w N
in ce
N
ov a
Sc ot ia Ed N ew w ar fo d un Is dl la an nd d an d La br ad or
ic k sw
Pr
N
ew
Br un
ue be c Q
nt ar io O
an ito ba M
Al be rt a Sa sk at ch ew an
Br it
is h
C
ol um
bi a
0
Non-Forest Land
Source: Canada's National Forest Inventory - CanFI 2001. https://nfi.nfis.org/history.php?lang=en
Of the 402.1 million hectares of forest and other wooded land, close to 93% of Canada’s forests are publicly owned while the remaining 7% is operated by private owners. Canada’s Forest Ownership Ownership % Hectares Provincial 77% 309,617,000 Federal 16% 64,336,000 Private 7% 28,147,000 Source: Canada's Forests Web site, Natural Resources Canada. Reproduced with the permission of the Minister of Public Works and Government Services, 2009, and courtesy of the Canadian Forest Service. http://canadaforests.nrcan.gc.ca/statsprofile Canada’s Forest and other Wooded Land 402,100,000 hectares
4
FOREST CERTIFICATION Forest certification assures customers that the products they purchase originate from well sustained and managed forests. In Canada, there are three voluntary certification systems available to forest companies: Canadian Standards Association (CSA), Sustainable Forestry Initiative (SFI) and Forest Stewardship Council (FSC). By the end of 2009, over 155 million hectares of Canada’s forest land was certified with one or more of those three forest certification systems – more than 16 times the area recorded in 2000.
Forest Certification in Canada 160
140
Millions of Hectares Certified
120
100
80
60
40
20
0 1999
2000
2001
2002
2003 CSA
2004 SFI
FSC
2005
2006
2007
2008
2009
Total
Source: Canadian Sustainable Forestry Certification Coalition
Canadian Certification in the Global Context (2009 Year-end) 160
140
120 Millions of Hectares Certified
Another universally recognized certification system, which is used more throughout Europe, is Program for the Endorsement of Forest Certification (PEFC). As illustrated, Canada, by far, remains the world leader in forest certification.
100
80
60
40
20
0 Canada
US
Finland
Russia
Sweden
Australia
Germany
Brazil
Malaysia
France
Chile
Source: Canadian Sustainable Forestry Certification Coalition
5
FOREST HARVESTS Prior to 2006, about one million hectares of forests were harvested annually for commercial applications, and to a lesser degree fuel purposes. Since then, the harvest levels have dropped significantly, with notable declines observed in Quebec and Ontario as a result of their provincial harvest reductions. In addition to that internal factor, the huge drop is also the result of the economic downturn in the United States which began in late 2007. Harvest of Canada’s Forests, hectares 2002 Atlantic Canada Quebec Ontario Manitoba Saskatchewan Alberta BC Territories Canada
2003
176,851 339,064 194,941 15,042 25,070 81,965 167,774 51 1,000,758
2004
180,740 284,563 231,217 15,584 29,053 79,707 174,101 75 995,040
186,195 306,321 210,226 17,528 29,241 79,979 180,959 99 1,010,548
2005 172,747 323,642 225,213 13,648 41,825 83,670 197,599 162 1,058,506
2006
2007
2008
140,374 213,886 211,874 13,648 15,433 73,695 162,328 326 831,564
135,115 180,766 183,985 13,648 14,588 69,380 168,160 261 765,903
135,109 147,279 158,651 13,736 13,078 68,370 144,335 250 680,808
Harvest of Canada's Forests 1,100,000 1,000,000 900,000 800,000
Hectares
700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Atlantic Canada
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Territories
Source: National Forestry Database, Canadian Council of Forest Ministers (nfdp.ccfm.org)
6
From 1994 to 2005, the area harvested annually average around 1 million hectares. Although that number seemed daunting, in retrospect that is less than 0.35% of the available non-reserved forest land in Canada. In the latest tally, only 680,808 hectares were harvested or 0.231% of the non-reserved forests. Area Harvested in Canada, hectares 2000 2001 2002 2003 2004 2005 2006 2007 2008
Area Harvested
Non-reserved Forest Land
1,068,754 1,015,319 1,000,758 995,040 1,010,548 1,058,506 831,564 765,903 680,808
294,836,000
Area Harvested as a % of Non-reserved Forest Land 0.362% 0.344% 0.339% 0.337% 0.343% 0.359% 0.282% 0.260% 0.231%
1,500,000
0.37%
1,400,000
0.36%
1,300,000
0.35%
1,200,000
0.34%
1,100,000
0.33%
1,000,000
0.32%
900,000
0.31%
800,000
0.30%
700,000
0.29%
600,000
0.28%
500,000
0.27%
400,000
0.26%
300,000
0.25%
200,000
0.24%
100,000
0.23%
0
Area Harvested as a % of Nonreserved Forest Land
Hectares
Area Harvested in Canada
0.22% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Area Harvested
Area Harvested as a % of Nonreserved Forest Land
Source: National Forestry Database, Canadian Council of Forest Ministers (nfdp.ccfm.org)
7
GROWING STOCK
Photo Credit: FPInnovations
Based on the findings released in the CanFI 2001, Canada is estimated to have a total growing stock (from both reserved and non-reserved forests) of 32.98 billion cubic metres, growing on Canada’s 401.46 million hectares of forested land. Canada’s Growing Stock Forest Type cubic metres % Softwood 21,768,780,000 66% Hardwood 3,957,960,000 12% Mixedwood 7,256,260,000 22% Source: Canada's Forests Web site, Natural Resources Canada. Reproduced with the permission of the Minister of Public Works and Government Services, 2009, and the courtesy of the Canadian Forest Service. http://canadaforests.nrcan.gc.ca/statsprofile Canada’s Growing Stock 32,983,000,000 m3
With over 180 tree species, Canada’s forests are considered to be extremely diverse. As shown above, close to 66% are of conifer (softwood) species, 12% broad-leaved (hardwood) and the remaining 22% are of mixed species.
8
Growing Stock on Non-Reserved Forest Land by Province Although British Columbia is the fifth largest province/territory in area, its forests hold more than one-third of the nation’s growing stock, and more than 43% of the softwood stock. On the other hand, Ontario and Quebec combine to hold more than 57% of Canada’s hardwood growing stock. Canada’s Growing Stock on Non-reserved Forest Land, 2001 British Columbia Alberta Saskatchewan Manitoba Ontario Quebec New Brunswick Nova Scotia Prince Edward Island Newfoundland & Labrador Yukon Territory Northwest Territories Nunavut Canada
Softwood million m3 9,102 1,426 642 426 3,909 3,177 352 247 14 521 484 741 13 21,054
% 43.2% 6.8% 3.0% 2.0% 18.6% 15.1% 1.7% 1.2% 0.1% 2.5% 2.3% 3.5% 0.1%
Hardwood million m3 617 893 501 241 2,291 1,397 180 111 16 37 62 100 2 6,448
Total million m3 9,719 2,319 1,143 667 6,200 4,574 532 358 30 558 546 841 15 27,503
% 9.6% 13.8% 7.8% 3.7% 35.5% 21.7% 2.8% 1.7% 0.2% 0.6% 1.0% 1.6% 0.0%
% 35.3% 8.4% 4.2% 2.4% 22.5% 16.6% 1.9% 1.3% 0.1% 2.0% 2.0% 3.1% 0.1%
Canada's Growing Stock, 2001 - 27.5 billion m3 10,000 9,000 8,000 Million Cubic Metres
7,000 6,000 5,000 4,000 3,000 2,000 1,000
ito
un av ut N
rie s
y or es tT er r
Te rr it
th w N or
Yu ko n
La br ad or &
N
ew
fo un dl an d
ar d
Is la nd
Sc ot ia Pr in ce
Ed w
B ew
N ov a
ru ns w ic k
ue be c Q
nt ar io O
to ba an i M
a sk at ch ew an
A
lb er t
Sa
N
B
rit i
sh
C
ol um bi a
0
Softwood
Hardwood
Source: Natural Resources Canada - Canada's Forest Inventory 2001 (http://NFI.nfis.org)
9
Growing Stock on Non-Reserved Forest Land by Species Close to 77% of Canada’s growing stock is of softwood species, while the remaining is hardwood species. The growing stock of spruce alone is greater than all hardwood species combined. Collectively, spruce, pine and fir combine to represent more than 61% of Canada’s growing stock. Aspen/poplar, representing more than 60% of all hardwood stock, is third overall. Canada’s Growing stock on Non-Reserved Forest Land, 2001
Softwood
Hardwood
Volume % million m3 34.7% 16.5% 10.9% 6.2% 21,054 4.1% 3.1% 1.1% 0.0% 13.8% 4.7% 6,448 2.5% 2.1% 0.3%
million m3 9,537 4,532 3,000 1,700 1,131 844 300 10 3,805 1,283 699 580 81
Spruce Pine Fir Hemlock Cedar & other softwoods Douglas-fir Larch Unspecified conifers Aspen/poplar Birch Maple Other hardwoods Unspecified hardwoods
%
76.6%
23.4%
3
Canada's Growing Stock, 2001 - 27.5 billion m 10,000 9,000
7,000 6,000 5,000 4,000 3,000 2,000 1,000
Softwood
Unspecified hardwoods
Other hardwoods
Maple
Birch
Aspen/poplar
Unspecified conifers
Larch
Douglas-fir
Cedar & other softwoods
Hemlock
Fir
Pine
0 Spruce
Millions of Cubic Metres
8,000
Hardwood
Source: Natural Resources Canada - Canada's Forest Inventory 2001 (http://NFI.nfis.org)
10
TIMBER SUPPLY AND HARVEST The provincial governments are responsible for determining the amount of timber to be harvested from the woods. This is often referred to as the timber supply (or annual allowable cut - AAC), which is used to regulate harvest levels so the harvest remains sustainable. In 2007, Canada’s wood supply was set at 237 million cubic metres, but only 163 million cubic metres were actually harvested. While the wood supply remain unchanged in 2008, the actual harvest fell by more than 21 million cubic metres, with the biggest drop coming from British Columbia. Canada’s Wood Supply vs. Roundwood Harvested, millions of cubic metres 2003 Wood Supply Actual Harvest
2005 Wood Supply Actual Harvest
2007 Wood Supply Actual Harvest
2008 Wood Supply Actual Harvest
Atlantic Canada 20.94 19.78
NWT Canada Yukon 54.51 31.89 9.63 8.22 24.82 76.14 0.24 226.39 40.14 24.32 2.11 4.90 24.16 65.36 0.06 180.83 Source: National Forestry Database, Canadian Council of Forest Ministers (nfdp.ccfm.org)
Atlantic Canada 21.89 19.15
NWT Canada Yukon 47.82 31.73 9.63 7.61 26.22 84.82 0.24 229.97 38.41 23.34 2.47 5.30 27.55 86.86 0.05 203.13 Source: National Forestry Database, Canadian Council of Forest Ministers (nfdp.ccfm.org)
Atlantic Canada 22.95 16.78
NWT Canada Yukon 47.82 31.59 9.02 7.63 28.40 89.54 0.34 237.29 29.36 16.18 2.00 2.41 20.51 75.42 0.05 162.71 Source: National Forestry Database, Canadian Council of Forest Ministers (nfdp.ccfm.org)
Atlantic Canada 22.82 16.61
NWT Canada Yukon 47.82 31.07 9.02 7.59 29.68 88.79 0.34 237.12 23.62 16.18 2.00 1.35 19.74 61.75 0.04 141.29 Source: National Forestry Database, Canadian Council of Forest Ministers (nfdp.ccfm.org)
QC
QC
QC
QC
ON
ON
ON
ON
MB
MB
MB
MB
SK
SK
SK
SK
AB
AB
AB
AB
BC
BC
BC
BC
Since 2003, increases in both wood supply and actual harvest can be observed in British Columbia and Alberta while notable decreases occurred in Ontario, Quebec and the Atlantic provinces.
11
Canada's Wood Supply vs. Actual Harvest 250
Millions of Cubic Metres
200
150
100
50
1990
1991
1992
1993
Atlantic Canada
1994
1995
Quebec
1996 Ontario
1997
1998
Manitoba
1999
2000
2001
Saskatchewan
2002
Alberta
2003
2004
2005
British Columbia
2006
2007
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
Wood Supply
Actual Harvest
0
2008
Territories
Source: National Forestry Database, Canadian Council of Forest Ministers (nfdp.ccfm.org)
From 2004 to 2006, British Columbia’s volume harvested was greater than the province’s wood supply. In 2005 for instance, the province’s wood supply was set at 84.8 million cubic metres (36.9% of Canada’s), while an estimated 86.9 million cubic metres were harvested. This is a direct reaction to the mountain pine beetle epidemic. The volume harvested in BC in 2005 translated to about 43.3% of all trees harvested in Canada. The 141.3 million cubic metres that were harvested in 2008 was the lowest volume recorded in the past 19 years.
12
Volume Harvested per Area Back in 2005, the area harvested in Ontario and Quebec combined to represent more than half the nation’s total. However, the volume generated from those forests was less than one-third of the total volume produced by Canada. Conversely, trees harvested from BC’s forests represented more than 43% of the nation’s volume while the province’s area harvested was three times less than Ontario and Quebec combined. It can be seen that more volume per area is generated in British Columbia’s forests. In fact, British Columbia’s volume per area ratio remains two times greater than the nation’s average. Canada’s Volume Harvested per Area, cubic metre per hectare Atlantic Canada 111.3 105.7 108.7 109.5 111.9 110.8 130.2 124.2 123.0
2000 2001 2002 2003 2004 2005 2006 2007 2008
QC
ON
MB
SK
AB
BC
Canada
125.9 125.0 122.1 141.1 140.8 118.7 156.6 162.4 160.4
131.8 109.2 135.0 105.2 119.5 103.6 97.8 88.0 102.0
140.0 140.0 140.0 135.1 120.1 181.3 181.3 146.5 145.6
196.4 176.0 171.9 168.6 207.6 126.8 226.8 165.3 102.9
318.7 295.8 299.3 303.2 293.1 329.2 342.5 295.5 288.7
383.5 425.3 464.1 375.4 480.7 439.6 493.1 448.5 427.8
188.6 182.8 195.7 181.7 205.6 191.9 221.0 212.4 207.5
Canada's Volume Harvested per Area Harvested 500
450
400
350
m3 / ha
300
250
200
150
100
50
0 1990
1991
Atlantic Canada
1992
1993 Quebec
1994
1995 Ontario
1996
1997
1998
Manitoba
1999
2000
2001
Saskatchewan
2002
2003
Alberta
2004
2005
2006
British Columbia
2007
2008
Canada
Source: National Forestry Database, Canadian Council of Forest Ministers (nfdp.ccfm.org)
13
CANADA’S FOREST INDUSTRY As one of the largest exporters of forest products in the world, Canada contributes significantly to the world markets. Although Canada remains one of the top exporters of softwood lumber, oriented strandboard (OSB), various pulp products, and newsprint, most of the products are sold to the United States. By being reliant on the United States, the well-being of the Canadian industry hinges on the state of the economy. Following a difficult 2007, 2008 saw further decrease in all export shipments. With the ongoing battle against the mountain pine beetle, the weakness of the US housing market (driven by the mortgage situation and the historically high inventories of unsold homes) along with the surging Canadian dollar joined forces to create the perfect storm for wood producers. When the US housing market was thriving from 2002 to 2005, record volumes of wood products were produced and exported. Unfortunately the housing bubble burst in late 2006, ultimately creating a negative ripple effect which shook the entire industry. After topping off at 2.07 million units the previous year, US housing starts in 2007 were recorded at 1.35 million. In 2008, residential construction in the United States fell below 1 million units, the lowest level since record keeping began in 1950. It was also the first time in a decade that starts in Japan were higher than the United States. While the country tries to climb out of the recession, the latest annual tally shows that only 554,000 houses were built in 2009.
Housing Starts in the United States, Japan and Canada 2,200,000 2,000,000 1,800,000
Number of Houses
1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1994
1995
1996
1997
1998
1999
2000 US
2001
2002
Japan
2003
2004
2005
2006
2007
2008
2009
Canada
Source: US Census of Bureau, Canada Mortgage and Housing Corporation, Japan Lumber Journal
14
In addition to the housing slump, the industry also dealt with the increased strength of the Canadian dollar. By late 2007, parity with the US dollar was reached for the first time since 1976, which unfortunately made Canadian forest products less attractive to US customers. After strengthening in early 2009, the US dollar once again fell close to parity in the beginning of 2010.
Exchange Rate - Canadian Dollar vs. US Dollar 1.7
1.6
1.5
CAD / 1 USD
1.4
1.3
1.2
1.1
Compared to the Canadian Dollar, the US Dollar (September 2010) has weakened by 34.84% since January 2002
1
20 10
20 09
20 08
20 07
20 06
20 05
20 04
20 03
20 02
20 01
20 00
19 99
19 98
19 97
19 96
19 95
0.9
The effect of these events was demoralizing as it forced numerous companies into financial crisis. For many that survived, and are still riding out this storm, production levels have been curtailed. Recovery in housing starts relies heavily on the inventory of unsold homes, as well as the clearance of foreclosure homes. Pulp and paper producers are also faced with tough tasks. With the anticipated drop of timber supply in Eastern Canada, along with the continuing mountain pine beetle infestation in the west, wood fibre costs are expected to rise across Canada. Both of these issues, along with other challenges, will hurt pulp and paper producers. Increased demand for pulp products from China will help offset the fall in shipments to the US and Europe. As a whole, volumes of wood products produced and exported fell to another low in 2009. Forest products exported were valued at $24.9 billion, down $7.1 billion (22%) from the previous year, and more than $26.3 billion since 2000. Paper products accounted for $10.9 billion, followed by wood products ($7.4), pulp products ($5.2) and wooden furniture ($1.3).
15
FOREST INDUSTRY AND EMPLOYMENT As the most geographically dispersed industrial employer in Canada, the forest industry continued to provide employment opportunities for Canadians across the nation. According to the Labour Force Survey, over 377,400 workers were employed by the industry in 2000. Unfortunately, that number has dwindled since and extended its loss as the economy continues to recover. In the latest survey collected, over 238,200 workers were working for the industry, the lowest level in the past two decades. A further breakdown shows that more than half the jobs were provided by the wood industry sector. Even though the number of indirect jobs is unavailable, it is estimated that one direct job echoes three indirect jobs. Direct Jobs in Canada’s Forest Industry, Labour Force Survey
2002 2003 2004 2005 2006 2007 2008 2009
Logging & Forestry Services 52,700 55,800 51,900 46,400 41,500 39,700 33,800 26,500
Support Activities for Forestry Industry 21,100 21,100 20,200 23,200 21,500 20,800 20,200 19,800
Wood Industries
Paper and Allied Industries
Total
175,400 185,300 186,300 169,300 166,400 146,500 129,100 117,600
106,300 108,200 103,800 101,200 94,200 87,100 90,600 74,300
355,500 370,400 362,200 340,100 323,600 294,100 273,700 238,200
Canada's Forest Industry, Direct Employment by Sector 400,000
350,000
300,000
Jobs
250,000
200,000
150,000
100,000
50,000
0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Logging & Forestry Services
Support Activities for Forestry Industry
Wood Industries
Paper and Allied Industries
Source: Canada's Forests Web site, Natural Resources Canada. Reproduced with the permission of the Minister of Public Works and Government Services, 2010, and the courtesy of the Canadian Forest Service. http://canadaforests.nrcan.gc.ca/statsprofile
16
FOREST INDUSTRY AND GDP In addition to providing employment opportunities to Canadians across the country, the forest industry has also been an important contributor to the nation’s gross domestic product (GDP). Since 1991, the sector’s contribution (in value) has been on the rise, peaking at $31.76 billion in 2005. However, big declines were observed thereafter and by 2009, the contribution to GDP fell to below $20 billion, erasing all gains since 1991. Aside from the drop, increased inputs from other sectors have dwarfed the forest industry’s efforts.
Forest Industry’s Contribution to Canada’s GDP, 2002 Dollars, billions of Canadian Dollars 2003
2004
2005
2006
2007
2008
2009
Forestry & Logging Industry Paper Product Manufacturing Industry Wood Product Manufacturing Industry
5.76
6.17
6.23
5.94
5.32
4.43
3.57
11.89
12.01
12.11
11.05
10.46
9.63
8.22
12.14
12.60
13.42
13.17
11.69
9.74
8.10
Forest Sector $
29.79
30.78
31.76
30.16
27.47
23.79
19.89
Forest Sector %
2.7
2.7
2.7
2.5
2.2
1.9
1.7
ALL SECTORS
1,103.33
1,140.00
1,176.22
1,206.44
1,248.82
1,252.32
1,169.82
32.5
3.25
30.0
3.00
27.5
2.75
25.0
2.50
22.5
2.25
20.0
2.00
17.5
1.75
15.0
1.50
12.5
1.25
10.0
1.00
7.5
0.75
5.0
0.50
2.5
0.25
0.0
Contribution to GDP (%)
Contribution to GDP (Constant 2002 - Billions of Canadian Dollars)
The Canadian Forest Sector's Contribution to GDP
0.00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Forestry and Logging Industry
Paper Product Manufacturing Industry
Wood Product Manufacturing Industry
Contribution to GDP (constant 2002) (percent)
Source: Canada's Forests Web site, Natural Resources Canada. Reproduced with the permission of the Minister of Public Works and Government Services, 2010, and the courtesy of the Canadian Forest Service. http://canadaforests.nrcan.gc.ca/statsprofile
17
FOREST PRODUCTS INDUSTRY In 2008, Canada exported $32 billion worth of forest products, which was a drop of $4 billion from the previous year, and more than $20 billion from 2000. Wood products, namely lumber and engineered wood panels, are no longer the top forest product exported by the Canadian forest industry as exports fell by more than 27% in 2008. Surpassing wood products in 2008 were paper products, which exhibited a 2% growth. Since pulp and paper consumption is not directly related to housing starts, these products performed relatively well compared to wood products and wooden furniture. In 2009, the export levels fell 22% and dipped to another record low at $24.9 billion. Although pulp & paper products were able to endure the recession in 2008, their shipments ultimately declined in 2009.
Canada Exports of Forest Products, millions of Canadian Dollars 2005 Wood Products Pulp Products Paper Products Wooden Furniture Total
2006
20,278.10 6,491.37 15,352.30 2,959.30 45,081.07
2007
17,398.36 6,651.74 14,285.99 2,745.10 41,081.19
2008
13,519.71 7,315.82 12,892.75 2,260.38 35,988.66
9,835.21 7,202.00 13,157.60 1,797.72 31,992.53
2009 7,445.27 5,246.06 10,930.84 1,261.31 24,883.48
% Change (08-09) -24.3% -27.2% -16.9% -29.8% -22.2%
Canada Exports of Forest Products 55 50 45
Billions of Canadian Dollars
40 35 30 25 20 15 10 5 0 1995
1996
1997
1998
1999
2000
Wood Products
2001
Pulp Products
2002
2003
2004
Paper Products
2005
2006
2007
2008
2009
Wooden Furniture
Source: Global Trade Information Services, Inc.
18
While exports fell in 2008, products sold to non-traditional markets such as the Middle East and India grew by more than 32%. Continuing the trend, export sales further declined by more than 22% in 2009, with the exception of China which grew by 12.3% to $1.87 billion. Canada Exports of Forest Products, millions of Canadian Dollars United States China EU27 Japan Middle East South Korea Brazil Taiwan Other Total
2006
2007
2008
2009
32,694.31 1,278.62 1,917.02 1,859.41 364.44 500.89 227.64 341.48 1,897.38 41,081.19
27,088.78 1,697.58 2,177.37 1,511.27 474.43 559.89 166.84 345.59 1,966.91 35,988.66
23,139.49 1,661.09 1,846.10 1,436.83 627.65 498.42 285.38 321.39 2,176.17 31,992.53
17,890.85 1,865.91 1,400.87 1,095.83 353.98 351.03 205.94 205.53 1,513.55 24,883.48
% Change (08-09) -22.7% 12.3% -24.1% -23.7% -43.6% -29.6% -27.8% -36.0% -30.4% -22.2%
Canada Exports of Forest Products 55 50 45
Billions of Canadian Dollars
40 35 30 25 20 15 10 5 0 1995
1996
1997
1998
United States
1999 China
2000 EU27
2001 Japan
2002
2003
Middle East
2004
South Korea
2005 Brazil
2006 Taiwan
2007
2008
2009
Other
Source: Global Trade Information Services, Inc.
19
The balance of trade, also known as net exports, is defined as the difference between the monetary value of exports and imports in an economy (over a given period of time). A positive balance of trade, known as a trade surplus, signifies that a jurisdiction has exported more than they have imported. Meanwhile, a negative balance of trade is known as a trade deficit or a trade gap, and implies that the jurisdiction has imported more than they have exported. This measure also signifies whether that jurisdiction is self reliant, or whether it requires incoming products to meet the consumption needs. Canada’s Trade Balance of Forest Products, millions of Canadian Dollars Wood Products Pulp Products Paper Products Wooden Furniture Total
2004
2005
2006
18,404.80 6,787.29 9,318.79 1,619.67 36,130.54
16,741.86 5,939.81 9,277.67 1,241.58 33,200.92
13,837.56 6,211.94 8,021.81 725.83 28,797.14
2008-2009 Change 10,029.59 6,517.51 4,563.83 -1,953.68 6,820.96 6,663.93 4,896.42 -1,767.51 6,687.11 6,886.75 4,951.37 -1,935.38 50.39 -568.90 -757.48 -188.59 23,588.05 19,499.29 13,654.13 -5,845.16 Source: Global Trade Information Services, Inc. 2007
2008
2009
Canada’s forest products industry has seen positive trade balances for all sectors over the past years (with 2004 being a peak year for the entire industry). Unfortunately, all four sectors have seen their trade balance decline since the pinnacle. Due to the housing slump in the US, trade balance of wood products’ exports fell significantly – more than $14 billion since 2004, while wooden furniture has had a negative trade balance since 2008.
Canada's Trade Balance of Forest Products
Wood Products
Pulp Products
Paper Products
Wooden Furnitire
-2
0
2
4
6
8
10
12
Billions of Canadian Dollars
Net Imports
2004
2005
2006
2007
2008
14
16
18
20 Net Exports
2009
Source: Global Trade Information Services, Inc.
20
When compared to other exports, forest products as a percentage have been dipping since 1995. As other industries continued to increase their exports, forest products became stagnant and remained at around $45 billion for much of the decade, until the big decline which began in 2006.
500
16.5%
450
15.5%
400
14.5%
350
13.5%
300
12.5%
250
11.5%
200
10.5%
150
9.5%
100
8.5%
50
7.5%
0
Forest Products Exports (%)
Billions of Canadian Dollars
Canada Exports of Forest Products vs. All Exports
6.5% 1995
1996
1997
1998
1999
Forest Products
2000
2001
2002
2003
Non-Forest Products
2004
2005
2006
2007
2008
2009
Forest Products % (RHS)
Source: Global Trade Information Services, Inc.
21
WOOD PRODUCTS INDUSTRY
Credit: www.naturallywood.com
Across the nation, the wood products industry produces thousands of products, including logs, dimension lumber, composite wood panels such as plywood and OSB, as well as other engineered wood products and wooden furniture. Since most of these wood products are sold to the United States for housing construction, the well-being of the Canadian wood industry hinges on the state of the US economy. As the US economy went into recession, the housing market dove into depression. After struggling through 2007, 2008 was not any better as housing starts in the US fell below 1 million units for the first time since record keeping began in 1950. By 2009, the housing numbers dipped lower to another record low of 554,000 units.
22
Realistically, exports of wood products have been on the decline since peaking in 2004 at $25.2 billion. Once the housing market in the US cooled, the export figures fell drastically. In just 3 years, export sales (2007) were recorded at $15.8 billion, as close to $10 billion of shipments evaporated. By 2009, the total exports fell another 25% from the previous year to just $8.7 billion. Looking at the below table, the differences in 2006 and 2009 are truly staggering. In 2009, the total exports were less than what was recorded for just lumber products 3 years ago (2006). Although its share has decreased significantly, lumber remained the top wood product sold by the Canadian wood industry.
Canada Exports of Wood Products, millions of Canadian Dollars Wood Fuel Logs Lumber Veneer Sheets Wood Continuously Shaped Particleboard & OSB Fibreboard & MDF Plywood Builders' Joinery Other Wood Products Wooden Furniture Total
2006
2007
2008
2009
288.25 624.66 9,323.55 466.52 314.82 2,451.09 529.31 560.80 2,081.61 757.76 2,745.10 20,143.46
303.66 489.67 7,479.25 346.84 279.56 1,478.33 449.41 445.65 1,625.62 621.70 2,260.38 15,780.10
304.05 385.25 5,370.26 262.14 198.01 894.84 362.10 327.79 1,188.15 542.63 1,797.72 11,632.92
315.53 332.20 3,944.35 199.64 129.93 713.15 316.56 229.07 829.11 434.16 1,261.07 8,704.78
% Change (08-09) 3.8% -13.8% -26.6% -23.8% -34.4% -20.3% -12.6% -30.1% -30.2% -20.0% -29.9% -25.2%
Canada Exports of Wood Products 26 24 22
Billions of Canadian Dollars
20 18 16 14 12 10 8 6 4 2 0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Wood Fuel
Logs
Lumber
Veneer Sheets
Wood Continuously Shaped
Particleboard & OSB
Fibreboard & MDF
Plywood
Builders' Joinery
Other Wood Products
Wooden Furniture
2008
2009
Source: Global Trade Information Services, Inc.
23
As the US continued to climb out of the current economic recession, the housing numbers slipped yet again. This latest stumble further affected the need for wood products from Canada. After seeing exports to the US fall by 27% in 2008, and more than $12 billion since the 2004 peak, the latest tally showed that shipments shrink by another 28.5% in 2009. Not only did the shipments to the US diminished, sales to other notable nations also decreased with the exception of China. While the total exports fell by more than 25%, products sold to China (mostly lumber) jumped 65%. Canada Exports of Wood Products, millions of Canadian Dollars United States Japan EU27 China Middle East South Korea Australia Other Total
2006
2007
2008
2009
17,641.33 1,326.17 542.41 117.50 86.03 100.70 49.50 279.83 20,143.46
13,251.35 1,036.34 665.95 169.26 141.09 112.17 53.79 350.15 15,780.10
9,288.72 1,002.41 550.72 234.70 111.02 89.03 61.41 294.91 11,632.92
6,637.37 784.10 428.03 387.67 97.83 97.81 38.38 233.59 8,704.78
% Change (08-09) -28.5% -21.8% -22.3% 65.2% -11.9% 9.9% -37.5% -20.8% -25.2%
Canada Exports of Wood Products 26 24 22
Billions of Canadian Dollars
20 18 16 14 12 10 8 6 4 2 0 1995
1996
1997
1998
United States
1999 Japan
2000 EU27
2001 China
2002
2003
Middle East
2004
2005
South Korea
2006
2007
Australia
Other
2008
2009
Source: Global Trade Information Services, Inc.
24
In 2008, wood products exported by British Columbia fell by 24.5% from the previous year to $5.25 billion. Even though British Columbia experienced such a big drop, the province represented more than 53% of the nation’s total exports. One year later, the province continued to lead the way, but saw shipments fall another 23.5%. Overall, the nation saw its export sales shrink by 24.3% with all provinces seeing doubledigit losses - Alberta being the only exception. Canada Exports of Wood Products by Province, millions of Canadian Dollars 2005 British Columbia Quebec Ontario Alberta New Brunswick Manitoba Nova Scotia Saskatchewan Newfoundland Prince Edward Island Territories Total
2006
9,163.33 4,296.44 3,066.76 1,601.60 958.00 448.83 269.84 443.85 11.81 16.74 0.90 20,278.10
2007
8,528.36 3,640.45 2,463.06 1,157.24 751.01 335.75 246.96 257.53 6.62 10.30 1.07 17,398.36
6,954.16 2,848.03 1,770.59 823.12 505.69 272.48 198.47 133.95 6.18 5.92 1.13 13,519.71
2008
2009
5,252.86 2,080.58 1,235.55 556.36 328.83 183.24 134.22 58.05 2.75 2.18 0.59 9,835.21
4,018.14 1,556.58 830.35 503.99 278.93 103.91 99.30 50.48 1.92 1.40 0.26 7,445.27
% Change (08-09) -23.5% -25.2% -32.8% -9.4% -15.2% -43.3% -26.0% -13.0% -30.1% -35.7% -55.3% -24.3%
Canada Exports of Wood Products 24 22 20
Billions of Canadian Dollars
18 16 14 12 10 8 6 4 2 0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
British Columbia
Quebec
Ontario
Alberta
New Brunswick
Manitoba
Nova Scotia
Saskatchewan
Newfoundland
Prince Edward Island
Territories
2007
2008
2009
Source: Global Trade Information Services, Inc.
25
CANADIAN LUMBER
Credit: www.naturallywood.com
After working through two challenging years, 2009 did not yield any better results for the Canadian industry. As the US economy continues to recover from the recession, the housing starts tumbled yet again to another all time low – further lowering the demand and consumption of Canadian lumber. Combined with other issues such as the mountain pine beetle, the softwood lumber agreement and the strong Canadian dollar, some companies filed for bankruptcy, while others were forced to bow out and close their doors, either temporarily or permanently. Overall, production and exports of lumber by Canada sank to another decade low. Specifically, softwood lumber production volume was down 11.7 million cubic metres and exports fell by more than 21.3%, or 7 million cubic metres.
26
LUMBER PRODUCTION & SHIPMENTS As a softwood rich nation, production of softwood lumber continued to represent more than 98% of all lumber produced in Canada. Within the softwood group, the SPF species group remains the majority produced, accounting for more than 90% in 2009. After peaking at 81.7 million cubic metres in 2004, softwood lumber production plunged to only 56.1 million cubic metres four years later, and then to 44.4 million cubic metres in 2009. As stressed previously, the main culprits for much of this decline were the economic turmoil, the weak US housing market, and the strong Canadian dollar.
Canadian Lumber Production & Shipments, cubic metres
SPF
Softwood
Hardwood
Total
Total Lumber Shipments
63,218,400 67,452,200 72,440,400 72,699,200 70,591,200 62,727,100 50,597,800 40,126,500
71,988,900 78,158,200 81,719,800 81,173,600 79,227,400 70,641,500 56,139,200 44,435,500
999,800 1,090,200 1,792,500 1,717,000 1,642,200 1,401,300 1,110,700 813,100
72,988,700 79,248,400 83,512,300 82,890,600 80,869,600 72,042,800 57,249,900 45,248,600
72,520,300 79,352,400 83,775,200 83,148,000 80,433,200 72,161,500 57,690,400 46,734,200
Production
2002 2003 2004 2005 2006 2007 2008 2009
Canadian Lumber Production 90,000,000
80,000,000
70,000,000
Cubic Metres
60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0 1999
2000
2001
2002
2003
2004
Softwood Lumber
2005
2006
2007
2008
2009
Hardwood Lumber
Adapted from Statistics Canada publication Sawmills, Catalogue 35-003, vols. 53-63, no. 12, http://www.statcan.gc.ca/bsolc/olc-cel/olc-cel?lang=eng&catno=35-003-X
27
SOFTWOOD LUMBER PRODUCTION Due to the aforementioned economic struggles, Canada’s softwood lumber production fell by another 12 million cubic metres in 2009; and more than 37.3 million cubic metres since 2004. As shown below, the province of British Columbia continued its tradition of producing half of the nation’s softwood lumber, a trend that began in 2005.
Canadian Softwood Lumber Production British Columbia cubic metres % 31,832,600 46.7% 32,155,500 46.9% 30,152,200 46.5% 33,555,000 46.6% 36,087,400 46.2% 39,204,700 48.0% 41,104,000 50.6% 41,050,100 51.8% 36,677,300 51.9% 28,191,500 50.2% 22,974,700 51.7%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Rest of Canada cubic metres % 36,402,800 53.3% 36,401,000 53.1% 34,644,800 53.5% 38,433,900 53.4% 42,070,800 53.8% 42,515,100 52.0% 40,069,600 49.4% 38,177,300 48.2% 33,964,200 48.1% 27,947,700 49.8% 21,460,800 48.3%
Total cubic metres 68,235,400 68,556,500 64,797,000 71,988,900 78,158,200 81,719,800 81,173,600 79,227,400 70,641,500 56,139,200 44,435,500
Cubic Metres
Canadian Softwood Lumber Production 90,000,000
54%
80,000,000
53%
70,000,000
52%
60,000,000
51%
50,000,000
50%
40,000,000
49%
30,000,000
48%
20,000,000
47%
10,000,000
46%
0
45% 1999
2000
2001
2002
British Columbia
2003
2004
Rest of Canada
2005
2006
British Columbia
2007
2008
2009
Rest of Canada
Adapted from Statistics Canada publication Sawmills, Catalogue 35-003, vols. 53-63, no. 12, http://www.statcan.gc.ca/bsolc/olc-cel/olc-cel?lang=eng&catno=35-003-X
28
Canadian Lumber Production, cubic metres 2007 British Columbia
2008
2009
Coast 3,914,600 3,179,800 2,421,500 36,677,300 28,191,500 22,974,700 Interior 32,762,700 25,011,700 20,553,200 Alberta 7,583,200 7,357,600 6,643,600 Saskatchewan x x x Manitoba x x x Ontario 7,753,400 5,508,900 3,541,600 34,498,500 28,492,200 22,091,300 Quebec 14,588,200 12,400,700 9,432,800 New 3,349,000 2,408,200 1,933,600 Brunswick Nova Scotia 1,224,700 816,800 539,700 Total 71,175,800 56,683,700 45,066,000 Adapted from Statistics Canada publication Sawmills, Catalogue 35-003, vols. 53-63, no. 12, http://www.statcan.gc.ca/bsolc/olc-cel/olc-cel?lang=eng&catno=35-003-X
Rest of Canada
Further analysis shows that the second largest lumber producing province, Quebec, produced less than half of British Columbia’s volume. Close to 90% of BC’s lumber production was in the Interior while the remaining volume was from the Coastal region. Back in 2004 and 2005, over 81 million cubic metres of lumber were produced from the nations’ harvest. Aside from the surging US housing market, this rise in harvests was also encouraged by the mountain pine beetle infestation. According to the latest release (March 2010), the Ministry of Forests and Range estimated that about 16.3 million hectares of provincial Crown Forest was affected to some degree, or 675 million cubic metres of timber. By 2012, the cumulative volume is forecasted to have reached 900 million cubic metres.
Cumulative Volume Killed on the Timber Harvesting Land Base 1,200
millions of cubic metres
1,000
800
600
Observed Cumulative Red- and Grey-Attack (2007) Projected Cumulative Red- and Grey-Attack (2007)
400
200
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Year
Source: BC Ministry of Forests and Range 1
Suppressed to meet the confidentiality requirements of the Statistics Act
29
SOFTWOOD LUMBER EXPORTS In 2009, Canada’s exports of softwood lumber fell 21% in volume to 25.9 million cubic metres, equivalent to a loss of 26.1% from the previous year to $3.77 billion dollars. When comparing the volume exported in 2009 to the volume shipped two years ago, just the volume from British Columbia (2007) is greater than the total sold by Canada (2009). Canada Exports of Softwood Lumber by Province, cubic metres 2006 British Columbia Quebec Alberta New Brunswick Ontario Nova Scotia Saskatchewan Manitoba Newfoundland Territories Prince Edward Island Total CAD $
2007
32,829,359 7,420,527 3,466,041 2,315,510 4,568,345 1,163,307 383,946 381,367 42,319 10 64,105 52,634,836 8,779,060,190
2008
28,251,947 6,241,590 3,378,332 2,007,011 3,588,151 914,283 169,791 339,464 47,826 540 29,400 44,968,335 7,084,104,492
2009
21,216,357 4,550,155 3,020,805 1,379,952 1,953,613 522,713 110,455 181,485 24,719 283 113 32,960,650 5,098,752,861
17,835,723 2,971,888 2,660,115 1,307,100 716,567 311,232 88,751 32,266 17,321 304 0 25,941,267 3,765,497,063
% Change (08-09) -15.9% -34.7% -11.9% -5.3% -63.3% -40.5% -19.6% -82.2% -29.9% 7.4% -100.0% -21.3% -26.1%
60,000,000
14
50,000,000
12
40,000,000
10
30,000,000
8
20,000,000
6
10,000,000
4
0
Billions of Canadian Dollars
Cubic Metres
Canada Exports of Softwood Lumber
2 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
British Columbia
Quebec
Alberta
New Brunswick
Ontario
Nova Scotia
Saskatchewan
Manitoba
Newfoundland
Territories
Prince Edward Island
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
30
As mentioned in the earlier pages, export sales of softwood lumber dipped to another all time low. Notable species groups, such as SPF, Hem-fir and Douglas-fir, continued their slides. Even the highly valued western red cedar could not withstand the economic turmoil and dove 23.7% in volume (and 19.8% in price). The SPF group continued to lead the exporting picture in terms of volume but trailed significantly in unit prices as it dropped another 4.5% to $120/m3 in 2009. Despite all these negatives, shipments of pine did rebound 20% in 2009 to 128,320 cubic metres. Canada Exports of Softwood Lumber by Species, cubic metres 2006
$ / m3
SPF Pine Hem-fir Sitka Spruce WRC Yellow Cedar Douglas-fir Other Total CAD $ SPF Hem-fir WRC D-fir
2007
44,266,863 152,685 2,750,058 50,819 1,863,458 224,395 1,556,597 1,769,961 52,634,836 8,779,060,000 147.49 204.23 413.25 278.02
2008
38,791,074 157,305 1,877,937 40,328 1,383,011 181,352 990,051 1,547,277 44,968,335 7,084,104,000 135.04 215.83 551.23 280.26
2009
28,408,998 106,957 1,262,807 24,969 1,144,836 170,911 789,811 1,051,361 32,960,650 5,098,753,000 125.61 250.52 625.62 282.79
22,182,378 128,320 1,099,886 23,735 873,428 123,239 635,683 873,783 25,940,452 3,765,357,000 120.00 244.67 502.05 290.42
% Change (08-09) -21.9% 20.0% -12.9% -4.9% -23.7% -27.9% -19.5% -16.9% -21.3% -26.2% -4.5% -2.3% -19.8% 2.7%
Canada Exports of Softwood Lumber by Species 60,000,000 55,000,000 50,000,000 45,000,000
Cubic Metres
40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1995
1996
1997 SPF
1998 Pine
1999 Hem-fir
2000
2001
Sitka Spruce
2002 WRC
2003
2004
Yellow Cedar
2005
2006
2007
Douglas-fir
Other
2008
2009
Source: Global Trade Information Services, Inc.
31
In the latest tally, shipments of softwood lumber to the US and Japan fell 28.6% (to 19.5 million m3) and 23.1% (to 2.16 million m3) respectively. While sales to these established markets have suffered setbacks since 2004, Canadian manufacturers continued to explore other opportunities, as illustrated by the growth to China and nearby nations. In fact, the rise in China (up 118% to 2.55 million m3) passed the volume sold to Japan (down 23.1% to 2.16 million m3) in 2009. However, products sold to China did not command the same price premium achieved with Japan since the Chinese were seeking lower quality products. Nonetheless, this was one of the few bright spots for the Canadian lumber industry this past year. Canada Exports of Softwood Lumber by Destination, cubic metres 2006
$ / m3
United States Japan China EU27 Middle East South Korea Australia Taiwan Other Total CAD $ United States Japan China EU27
2007
47,269,226 3,548,096 335,119 395,164 261,087 147,649 78,295 253,487 346,713 52,634,836 8,779,060,000 152.11 286.69 196.90 617.75
2008
39,140,343 2,878,043 651,113 638,073 440,669 250,884 72,773 358,640 537,797 44,968,335 7,084,104,000 141.48 264.96 155.20 501.15
2009
27,231,245 2,815,059 1,168,941 355,597 385,881 186,106 87,596 240,469 489,756 32,960,650 5,098,753,000 132.04 265.98 153.81 754.89
19,455,897 2,164,839 2,550,266 241,743 297,741 245,874 68,308 234,040 681,744 25,940,452 3,765,357,000 125.44 266.78 126.07 661.60
% Change (08-09) -28.6% -23.1% 118.2% -32.0% -22.8% 32.1% -22.0% -2.7% 39.2% -21.3% -26.2% -5.0% 0.3% -18.0% -12.4%
Canada Exports of Softwood Lumber 60,000,000 55,000,000 50,000,000 45,000,000
Cubic Metres
40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1995
1996
1997
United States
1998
1999
Japan
2000
China
2001
EU27
2002
Middle East
2003
2004
South Korea
2005
2006
Australia
2007 Taiwan
2008
2009
Other
Source: Global Trade Information Services, Inc.
32
CANADIAN PANELS
Credit: www.naturallywood.com
The depression in US housing starts, which began in late 2006, not only cooled the demand for lumber but also other building products such as OSB and plywood panels. As months passed, the economy worsened and more homes were foreclosed. Combined with the unsold units, a large overflow of housing inventory became available. Due to these factors, housing starts (2008) in the US fell below 1 million units for the first time since record keeping began in 1950. By 2009, the housing numbers dipped even lower to 554,000 units. The resurgence of the US housing market will likely follow the recovery of the US economy and job markets. While the housing numbers are not expected to rebound in the immediate future, the repair and remodelling sectors will help maintain some consumption level of these panels and other building products.
33
PLYWOOD & OSB PRODUCTION Compared to the peaks, plywood production in 2009 fell by more than 38.5% since 2004 while OSB dropped by more than 60.9% since 2006. With no significant recovery appearing on the horizon, the consumption for these structural panels will continue to ease until the housing market rebounds. In addition to dealing with the economic issues, the biggest battle for plywood is its substitute, competing product – OSB. With the continued preference for OSB over plywood by home builders, production (and demand) is expected to further decline.
Canada’s Plywood & OSB Production Plywood m3 million ft2 2,201 1,947,788 2,291 2,027,434 2,442 2,161,062 2,493 2,206,195 2,648 2,343,363 2,625 2,323,009 2,545 2,252,212 2,335 2,066,372 1,969 1,742,478 1,630 1,442,478
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
OSB million ft2 8,744 8,998 9,273 10,040 11,103 11,168 11,460 9,710 5,502 4,484
m3 7,738,053 7,962,832 8,206,195 8,884,956 9,825,664 9,883,186 10,141,593 8,592,920 4,869,027 3,968,142
Total million ft2 10,945 11,289 11,715 12,533 13,751 13,793 14,005 12,045 7,471 6,114
m3 9,685,841 9,990,265 10,367,257 11,091,150 12,169,027 12,206,195 12,393,805 10,659,292 6,611,504 5,410,619
Canada's Plywood & OSB Production 11,000,000 10,000,000 9,000,000 8,000,000
Cubic Metres
7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 1995
1996
1997
1998
1999
2000
2001
2002
Plywood
2003
2004
2005
2006
2007
2008
2009
OSB
Source: APA – The Engineered Wood Association
34
PLYWOOD EXPORTS Shipments of plywood by Canada fell nearly 50% in 2009 to 321,964 m3 (or $229 million). Although British Columbia managed to once again become the leader in plywood exports, it was at the expense of tremendous declines in Ontario. Canada Exports of Plywood by Province, cubic metres 2006 British Columbia Ontario Quebec Alberta New Brunswick Manitoba Nova Scotia Saskatchewan Newfoundland Territories Prince Edward Island Total CAD $
2007
480,589 332,527 114,194 41,168 867 1,096 643 755 43 0 92 971,974 560,801,442
2008
451,548 199,231 102,647 12,627 337 862 11,245 610 22 0 47 779,176 445,648,211
% Change (08-09) -45.4% -59.1% -29.4% 156.4% -97.3% -64.9% -49.5% -72.3% -98.9% -100.0% -48.2% -30.1%
2009
257,057 265,159 79,237 6,243 10,529 846 935 524 657 5 0 621,192 327,787,221
140,440 108,400 55,909 16,005 289 297 472 145 7 0 0 321,964 229,071,915
1,200,000
700,000,000
1,000,000
600,000,000
800,000
500,000,000
600,000
400,000,000
400,000
300,000,000
200,000
200,000,000
0
Canadian Dollars
Cubic Metres
Canada Exports of Plywood
100,000,000 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
British Columbia
Ontario
Quebec
Alberta
New Brunswick
Manitoba
Nova Scotia
Saskatchewan
Newfoundland
Territories
Prince Edward Island
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
35
SOFTWOOD PLYWOOD EXPORTS As the plywood industry in China keeps growing, its prowess is felt around the globe. Since the middle of the decade, exports of softwood plywood by Canada have dropped significantly. Shipments to traditional non-US markets such as EU27 and Japan have all but diminished as those markets are flooded with less expensive products from China. As a result, much of the displaced products were routed to the US, until the housing market struggled in the late stages of 2006. In monetary terms, sales of softwood plywood fell 36% in 2009, equivalent to a drop of 52% in volume. It is worth mentioning that Western Canada, specifically British Columbia, continues to be responsible for most of these softwood plywood exports. Canada Exports of Softwood Plywood, cubic metres 2006
$ / m3
United States EU27 Japan Other Total CAD $ United States Japan EU27
2007
477,691 3,055 33,626 5,932 520,304 268,999,822 530.79 571.71 330.65
2008
472,581 35,366 36,474 24,323 568,744 275,625,830 509.64 434.84 364.68
2009
304,495 20,915 8,842 112,821 447,073 198,951,182 571.64 647.65 411.19
190,296 8,644 8,120 6,975 214,035 127,731,590 609.06 531.26 385.53
% Change (08-09) -37.5% -58.7% -8.2% -93.8% -52.1% -35.8% 6.5% -18.0% -6.2%
700,000
400,000,000
600,000
350,000,000
500,000
300,000,000
400,000
250,000,000
300,000
200,000,000
200,000
150,000,000
100,000
100,000,000
0
Canadian Dollars
Cubic Metres
Canada Exports of Softwood Plywood
50,000,000 1995
1996
1997
1998
1999
United States
2000 EU27
2001
2002
Japan
2003
2004
Other
2005
2006
2007
2008
2009
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
36
HARDWOOD PLYWOOD EXPORTS Similar to softwood plywood, sales of hardwood panels have also taken a large drop since the middle of the decade. Five years removed from the peak, the export demand for hardwood plywood plunged to 105,492 m3 (which translates to just $98.9 million). Similar to its counterpart, hardwood plywood was also sold strictly to the US with very little delivered elsewhere. Despite trailing in both volume and value, the average prices for hardwood plywood remained higher than softwood panels.
Canada Exports of Hardwood Plywood, cubic metres 2006
$ / m3
United States Other Total CAD $ United States Other
2007
370,441 4,901 375,342 270,671,398 724.31 480.88
2008
196,283 3,365 199,648 163,542,740 825.00 477.96
% Change (08-09) -38.2% -53.1% -38.4% -22.0% 26.5% 39.5%
2009
169,025 2,364 171,389 126,773,790 744.68 382.24
104,383 1,109 105,492 98,927,459 942.07 533.19
450,000
450,000,000
400,000
400,000,000
350,000
350,000,000
300,000
300,000,000
250,000
250,000,000
200,000
200,000,000
150,000
150,000,000
100,000
100,000,000
50,000
50,000,000
0
Canadian Dollars
Cubic Metres
Canada Exports of Hardwood Plywood
0 1995
1996
1997
1998
1999
2000
United States
2001
2002 Other
2003
2004
2005
2006
2007
2008
2009
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
37
OSB EXPORTS From 1995 to 2006, exports of OSB grew by a staggering 200%, easily tripling from 3 million cubic metres to 9 million. Strong housing starts, along with home builders’ continued acceptance of OSB over plywood were some of the key factors leading to this exponential growth. Unfortunately, this amazing growth came to an abrupt halt in 2007 – the outcome of the weak housing market. It took the industry a decade to triple the output, yet it only took three years to see that entire growth vanish completely. Canada Exports of OSB by Provinces, cubic metres 2006 British Columbia Ontario Alberta Quebec Saskatchewan Manitoba Nova Scotia Territories Newfoundland Prince Edward Island New Brunswick Canada CAD $
2007
1,973,125 2,002,146 1,811,390 1,592,366 862,304 372,490 215 135 137 137 312,583 8,927,028 2,262,277,824
2008
1,854,789 1,362,521 1,383,277 985,556 591,059 338,970 60 0 138 0 5,653 6,522,023 1,272,315,306
2009
1,431,749 861,981 488,280 396,598 204,304 158,870 110 0 0 0 0 3,541,892 709,151,204
961,666 651,936 580,160 262,251 164,966 75,710 27 0 0 0 216 2,696,932 549,960,647
% Change (08-09) -32.8% -24.4% 18.8% -33.9% -19.3% -52.3% -75.5% -23.9% -22.4%
9,000,000
4.5
8,000,000
4.0
7,000,000
3.5
6,000,000
3.0
5,000,000
2.5
4,000,000
2.0
3,000,000
1.5
2,000,000
1.0
1,000,000
0.5
0
Billions of Canadian Dollars
Cubic Metres
Canada Exports of OSB
0.0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
British Columbia
Ontario
Alberta
Quebec
Saskatchewan
Manitoba
Nova Scotia
Territories
Newfoundland
Prince Edward Island
New Brunswick
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
38
The decline in OSB is even more pronounced when exports are analyzed in monetary terms. Although shipments in volume were growing until 2006, it was achieved under diminishing prices, as sales in dollars fell at a drastic rate two years earlier. By 2009, offshore sales of OSB were valued at just $550 million, six times less than the value recorded in 2004. Canada Exports of OSB, cubic metres 2006 United States Japan Other
$ / m3
2007
8,751,105 126,368 49,555 8,927,028 2,262,277,824 253.01 294.22
Total CAD $ United States Japan
2008
5,998,217 177,922 345,884 6,522,023 1,272,269,630 191.61 283.55
2009
3,188,918 174,408 178,494 3,541,820 709,135,849 196.21 266.15
2,411,895 132,112 152,925 2,696,932 549,960,647 201.66 264.94
% Change (08-09) -46.8% -2.0% -48.4% -45.7% -44.3% 2.4% -6.1%
4.00
10,000,000
3.75
9,375,000
3.50
8,750,000
3.25
8,125,000
3.00
7,500,000
2.75
6,875,000
2.50
6,250,000
2.25
5,625,000
2.00
5,000,000
1.75
4,375,000
1.50
3,750,000
1.25
3,125,000
1.00
2,500,000
0.75
1,875,000
0.50
1,250,000
0.25
625,000
0.00
cubic metres
Billions of Canadian Dollars
Canada Exports of OSB
0 1995
1996
1997
1998
1999
United States
2000
2001 Japan
2002
2003
Other
2004
2005
2006
2007
2008
2009
Exported Volume (RHS)
Source: Global Trade Information Services, Inc.
39
PARTICLEBOARD EXPORTS Since 2001, exports of particleboard by Canada have declined gradually, with shipments from British Columbia and Alberta having all but disappeared. As other provinces continue to fade, Quebec and Ontario combine to represent more than 95% of the nation’s particleboard export sales. Canada Exports of Particleboard by Provinces, cubic metres 2006 Quebec Ontario New Brunswick British Columbia Alberta Saskatchewan Manitoba Nova Scotia Newfoundland Territories Prince Edward Island Canada CAD $
2007
383,985 124,741 53,295 218,709 6,156 1,710 137 7 0 0 5 788,745 188,813,617
2008
356,341 214,449 48,024 159,928 5,169 496 1,570 49 0 0 0 786,026 206,014,923
% Change (08-09) -5.0% -26.5% -42.4% -15.0% 40.8% 170.9% -39.9% -48.6% -12.2% -12.1%
2009
441,394 166,923 30,438 9,167 2,159 536 298 70 0 0 0 650,985 185,685,043
419,148 122,645 17,538 7,788 3,040 1,452 179 36 0 0 0 571,826 163,188,559
1,400,000
350,000,000
1,200,000
300,000,000
1,000,000
250,000,000
800,000
200,000,000
600,000
150,000,000
400,000
100,000,000
200,000
50,000,000
0
Canadian Dollars
Cubic Metres
Canada Exports of Particleboard
0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Quebec
Ontario
New Brunswick
British Columbia
Alberta
Saskatchewan
Manitoba
Nova Scotia
Newfoundland
Territories
Prince Edward Island
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
40
In 2009, offshore sales of particleboard in both volume and value fell by a matching 12%, sinking to a new record low. Similar to OSB panels, much of the exported particleboard was sold to the US. Canada Exports of Particleboard, cubic metres 2006
$ / m3
United States Other Total CAD $ United States Other
2007
786,449 2,296 788,745 188,813,617 239.49 203.25
2008
778,221 7,805 786,026 206,014,923 261.90 281.26
% Change (08-09) -12.1% -31.2% -12.2% -12.1% 0.0% 5.5%
2009
648,907 2,078 650,985 185,685,043 285.09 331.69
570,396 1,430 571,826 163,188,559 285.22 349.86
1,400,000
350,000,000
1,200,000
300,000,000
1,000,000
250,000,000
800,000
200,000,000
600,000
150,000,000
400,000
100,000,000
200,000
50,000,000
0
Canadian Dollars
Cubic Metres
Canada Exports of Particleboard
0 1995
1996
1997
1998
1999
2000
2001
United States
2002
2003 Other
2004
2005
2006
2007
2008
2009
Total
Source: Global Trade Information Services, Inc.
41
MDF & FIBREBOARD EXPORTS After seeing exports fall below 1 million cubic metres for the first time since 1998, sales fell by another 21.2% in 2009. As China and Europe continue to expand their production capacities and provide customers worldwide with less expensive MDF, Canadian (and US) producers will see their market share decrease. Canada Exports of MDF & Fibreboard by Provinces, cubic metres 2006 Quebec Ontario British Columbia Alberta New Brunswick Nova Scotia Prince Edward Island Saskatchewan Manitoba Newfoundland Territories Canada CAD $
2007
341,261 472,110 246,367 214,365 74,907 81,689 930 831 2,102 1 0 1,434,563 529,307,265
2008
319,407 449,543 214,523 162,964 67,484 76,683 1,026 1,635 275 2 2 1,293,544 449,408,975
% Change (08-09) -4.7% -32.7% -12.2% -15.1% -36.4% -43.1% -98.8% -4.7% -95.3% -100.0% -21.2% -12.6%
2009
191,296 308,335 157,834 122,896 53,438 37,208 2,290 964 106 5 0 874,372 362,095,450
182,325 207,400 138,554 104,389 33,992 21,161 27 919 5 0 0 688,772 316,553,272
1,600,000
800,000,000
1,400,000
700,000,000
1,200,000
600,000,000
1,000,000
500,000,000
800,000
400,000,000
600,000
300,000,000
400,000
200,000,000
200,000
100,000,000
0
Canadian Dollars
Cubic Metres
Canada Exports of MDF & Fibreboard
0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Quebec
Ontario
British Columbia
Alberta
New Brunswick
Nova Scotia
Prince Edward Island
Saskatchewan
Manitoba
Newfoundland
Territories
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
42
While exports in volume fell by more than 21% in 2009, shipments in monetary terms decreased by 12.6% as prices improved throughout the calendar year. Similar to OSB and particleboard, most of the exported MDF and fibreboard were sold to the United States. Canada Exports of MDF & Fibreboard, cubic metres 2006 United States Other
$ / m3
Total CAD $ United States Other
2007
1,358,358 76,205 1,434,563 529,307,265 365.35 433.39
2008
1,144,345 149,199 1,293,544 449,408,975 345.31 363.62
% Change (08-09) -18.9% -44.4% -21.2% -12.6% 10.9% 11.9%
2009
795,267 79,105 874,372 362,095,450 414.35 411.83
644,782 43,990 688,772 316,553,272 459.49 461.01
1,600,000
800,000,000
1,400,000
700,000,000
1,200,000
600,000,000
1,000,000
500,000,000
800,000
400,000,000
600,000
300,000,000
400,000
200,000,000
200,000
100,000,000
0
Canadian Dollars
Cubic Metres
Canada Exports of MDF & Fibreboard
0 1995
1996
1997
1998
1999
2000
United States
2001
2002 Other
2003
2004
2005
2006
2007
2008
2009
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
43
WOODEN FURNITURE INDUSTRY
Credit: www.naturallywood.com
As competitors such as China and Thailand continue to strengthen their global reach, offshore sales of wooden furniture by Canada continue to fall. By 2009, export sales by Canada fell to just $1.26 billion, the lowest output since 1995.
44
Since 2002, export sales of wooden furniture by Canada have declined. Strong competition from overseas producers such as China will continue to put downward pressure on Canada’s export results. Although down 25.4%, products from Ontario continue to represent more than half of the nation’s export shipments. Canada Exports of Wooden Furniture by Province, millions of Canadian Dollars Ontario Quebec Manitoba British Columbia Alberta Nova Scotia New Brunswick Prince Edward Island Saskatchewan Newfoundland Territories Canada
2005
2006
2007
2008
2009
1,374.14 979.69 251.69 153.75 117.63 54.62 17.27 4.61 5.26 0.63 0.00 2,959.30
1,366.54 814.71 201.31 142.03 153.09 42.44 15.14 6.39 2.73 0.71 0.02 2,745.10
1,239.66 612.05 155.20 112.42 103.38 16.55 13.83 5.24 1.74 0.32 0.01 2,260.38
1,033.52 476.60 102.80 79.61 64.26 24.40 9.90 5.71 0.85 0.05 0.01 1,797.72
771.19 325.57 64.64 51.84 19.77 15.92 7.85 3.43 0.93 0.13 0.05 1,261.31
% Change (08-09) -25.4% -31.7% -37.1% -34.9% -69.2% -34.8% -20.8% -40.0% 9.1% 176.3% 237.5% -29.8%
Canada Exports of Wooden Furniture 4.0
3.5
Billions of Canadian Dollars
3.0
2.5
2.0
1.5
1.0
0.5
0.0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Ontario
Quebec
Manitoba
British Columbia
Alberta
Nova Scotia
New Brunswick
Prince Edward Island
Saskatchewan
Newfoundland
Territories
2008
2009
Source: Global Trade Information Services, Inc.
45
The United States remains Canada’s largest customer as it purchased over 99% of the wooden furniture exported. While Canada continues to lose ground in traditional markets such as the US, EU27 and Japan, shipments to other customers such as Mexico and the Middle East have emerged. In fact, products sold to the Middle East in 2009 surpassed the value sold to EU27 this past year. Canada Exports of Wooden Furniture, millions of Canadian Dollars 2006 United States Middle East EU27 China Japan Other Total
2007
2,695.08 7.39 10.14 0.71 3.40 28.39 2,745.10
2008
2,210.27 6.59 10.18 2.24 1.77 29.34 2,260.38
2009
1,749.76 7.27 7.57 1.11 1.23 30.77 1,797.72
1,213.00 17.75 5.39 3.07 1.25 20.85 1,261.31
% Change (08-09) -30.7% 144.1% -28.8% 175.3% 1.8% -32.2% -29.8%
Canada Exports of Wooden Furniture 4.0
3.5
Billions of Canadian Dollars
3.0
2.5
2.0
1.5
1.0
0.5
0.0 1995
1996
1997
1998
1999
2000
2001
2002
United States
2003
2004
2005
2006
2007
2008
2009
Other
Source: Global Trade Information Services, Inc.
46
Kitchen furniture, once the dominating product, now ranks as the third largest wood furniture exported by Canada. As a whole, wooden furniture exports fell by 30% in a challenging 2009 and continued its 7 year slide. Exports of Wooden Furniture, millions of Canadian Dollars 2006 Wooden Seats Upholstered Wooden Seats Not Upholstered Office Furniture Kitchen Furniture Bedroom Furniture Other Furniture Total
2007
252.52 72.30 542.92 696.86 334.69 845.82 2,745.10
2008
221.15 56.26 494.72 487.69 242.93 757.63 2,260.38
2009
197.85 49.34 478.51 314.19 163.55 594.29 1,797.72
147.10 37.98 370.07 196.73 126.98 382.46 1,261.31
% Change (08-09) -25.7% -23.0% -22.7% -37.4% -22.4% -35.6% -29.8%
Canada Exports of Wooden Furniture 4.0
3.5
Billions of Canadian Dollars
3.0
2.5
2.0
1.5
1.0
0.5
0.0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Wooden Seats Upholstered
Wooden Seats Not Upholstered
Office Furniture
Kitchen Furniture
Bedroom Furniture
Other Furniture
2007
2008
2009
Source: Global Trade Information Services, Inc.
47
PULP & PAPER PRODUCTS INDUSTRY
Photo Credit: Adobe ID 317ASP879-43321771-879-43321771
Although Canadian pulp is renowned and preferred by many for its high quality and long fibre length, eucalyptus nations continue their research to try to extend the length of their pulp. In the distant future, those competitive advantages that the pulp industry currently holds may no longer be found exclusively in Canadian products. As for the paper sector, the advancement in electronic communication will continue to lower the consumption of paper products, particularly newsprint, and even printing & writing papers to some degree. While this reduction is predicted in developed nations, opportunities might be possible in developing countries. On the other hand, other paper products such as wrapping & packaging papers, and household & sanitary paper products have to face off with substitute products made with non-wood fibre – in addition to offshore competition.
48
The combination of Quebec and Ontario continues to represent more than half of the nation’s pulp and paper export sales. While eastern Canada is responsible for producing paper products, western Canada is known for its pulp production. After seeing exports rise slightly by 0.7% in 2008, offshore sales plunged 20.5% in 2009. Canada Exports of Pulp & Paper Products by Province, millions of Canadian Dollars 2006
2007
2008
2009
7,488.35 4,788.49 4,543.75 1,446.41 1,260.90 441.35 288.58 230.35 448.01 1.39 0.15 20,937.73
6,723.90 5,121.46 4,115.52 1,388.50 1,342.07 701.39 259.74 213.80 341.05 0.93 0.21 20,208.56
7,152.40 4,699.27 4,171.01 1,609.27 1,089.74 804.03 288.99 206.74 337.28 0.83 0.04 20,359.60
5,845.70 3,476.35 3,311.50 1,315.40 980.04 652.54 224.54 202.66 166.26 1.89 0.03 16,176.90
Quebec British Columbia Ontario Alberta New Brunswick Nova Scotia Manitoba Saskatchewan Newfoundland Prince Edward Island Territories Canada
% Change (08-09) -18.3% -26.0% -20.6% -18.3% -10.1% -18.8% -22.3% -2.0% -50.7% 129.3% -17.0% -20.5%
Canada Exports of Pulp & Paper Products 30.0 27.5 25.0
Billions of Canadian Dollars
22.5 20.0 17.5 15.0 12.5 10.0 7.5 5.0 2.5 0.0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Quebec
British Columbia
Ontario
Alberta
New Brunswick
Nova Scotia
Manitoba
Saskatchewan
Newfoundland
Prince Edward Island
Territories
2008
2009
Source: Global Trade Information Services, Inc.
49
Since peaking at $27.9 billion in 2000, exports of pulp and paper products have declined gradually. While pulp products have fallen by 47.8% (or $4.8 billion), paper products dropped by 38.6% (or $6.9 billion). It should be noted that much of this downturn in paper products is directly related to the decline in newsprint consumption. Canada’s Exports of Pulp & Paper Products, millions of Canadian Dollars Pulp Products Paper Products Total
2006
2007
2008
2009
6,651.74 14,285.99 20,937.73
7,315.82 12,892.75 20,208.56
7,202.00 13,157.60 20,359.60
5,246.06 10,930.84 16,176.90
% Change (08-09) -27.2% -16.9% -20.5%
Canada Exports of Pulp & Paper Products 30.0 27.5 25.0
Billions of Canadian Dollars
22.5 20.0 17.5 15.0 12.5 10.0 7.5 5.0 2.5 0.0 1995
1996
1997
1998
1999
2000
2001
2002
Pulp Products
2003
2004
2005
2006
2007
2008
2009
Paper Products
Source: Global Trade Information Services, Inc.
50
Similar to wood products, the United States is also Canada’s largest customer for its pulp and paper products, with more than 70% of exports shipped there. Whilst sales to all notable countries fell by more 18% in 2009, products sold to China continued their growth. In less than three years since China surpassed EU27 to become the second largest customer, China’s imports from Canada continued to increase while shipments to the third place EU27 kept drifting downward. Canada Exports of Pulp & Paper Products by Province, millions of Canadian Dollars United States China EU27 Japan Middle East South Korea Brazil Other Canada
2006
2007
2008
2009
15,052.98 1,161.12 1,374.62 533.24 278.41 400.19 226.98 1,910.20 20,937.73
13,837.43 1,528.32 1,511.42 474.92 333.35 447.72 165.68 1,909.73 20,208.56
13,850.77 1,426.39 1,295.38 434.42 516.64 409.40 284.38 2,142.24 20,359.60
11,253.13 1,478.24 972.80 310.78 256.14 253.00 205.24 1,447.58 16,176.90
% Change (08-09) -18.8% 3.6% -24.9% -28.5% -50.4% -38.2% -27.8% -32.4% -20.5%
Canada Exports of Pulp & Paper Products 30.0 27.5 25.0
Billions of Canadian Dollars
22.5 20.0 17.5 15.0 12.5 10.0 7.5 5.0 2.5 0.0 1995
1996
1997
1998
United States
1999 China
2000 EU27
2001 Japan
2002
2003
Middle East
2004
2005
South Korea
2006 Brazil
2007
2008
2009
Other
Source: Global Trade Information Services, Inc.
51
CANADIAN PULP PRODUCTS
Photo Credit: FPInnovations
Across the nation, Canadian producers manufacture numerous pulp products, including mechanical pulp, chemical pulp, and recovered paper from recycled products. Mechanical pulp is produced via physical grinding, and is used for products which require less strength (i.e., newsprint). Alternatively, chemical pulp is produced with the aid of chemicals, which help break down the lignin, and then bind the cellulose fibres back together. These chemical pulps are often the raw material for paper products which require more strength, such as printing & writing papers, and sanitary & household papers. Finally, recovered papers are often obtained by salvaging from recyclable paper products. It is anticipated that the timber supply in Canada will continue to fall, resulting in a hike of wood fibre costs. While a harvest reduction in Quebec has been introduced by government, the fall in timber supply in the west is directly linked to the beetle infestation. This drop in timber supply across the nation will raise the cost of wood fibre, creating a big obstacle for many producers to overcome. Additionally, Canadian producers are faced with fierce competition from overseas, namely countries in Europe and South America.
52
PULP PRODUCTS PRODUCTION In 2009, the Canadian pulp industry produced over 17 million tonnes of wood pulp, some 3 million less than the previous year. While the paper industry in Canada consumed over 9.2 million tonnes of that production, the remainder was sold and exported as market pulp. Of the market pulp sold, 6.2 million tonnes were chemical grades while the rest was of mechanical (high yield) grades. Canadian Wood Pulp Production, metric tonnes Chemical Paper Grades
Mechanical (High Yield)
Total
14,531,000 13,484,000 13,900,000 13,995,000 14,043,000 13,300,000 12,078,000 11,793,000 10,713,000 8,981,000
12,340,000 11,385,000 11,621,000 11,968,000 12,195,000 12,010,000 11,362,000 10,588,000 9,653,000 8,099,000
26,871,000 24,869,000 25,521,000 25,963,000 26,238,000 25,310,000 23,440,000 22,381,000 20,366,000 17,080,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Canadian Wood Pulp Production 30,000,000 27,500,000 25,000,000 22,500,000
Metric Tonnes
20,000,000 17,500,000 15,000,000 12,500,000 10,000,000 7,500,000 5,000,000 2,500,000 0 2000
2001
2002
2003
2004
Chemical Paper Grades
2005
2006
2007
2008
2009
Mechanical (High Yield)
Source: Pulp & Paper Products Council
53
PULP PRODUCTS EXPORTS Similar to most forest products, 2009 was a challenging year for the pulp industry as offshore sales fell below 10 million tons for the first time in the past 15 years. As the sales of various kraft pulps continued to drift downward, a surge in recovered paper was observed. Despite the rise in recovered paper, the impressive volume sold in 2009 (1.7 million tons) translated to just $204 million in sales. Canada Exports of Pulp Products, metric tons 2006 Mechanical Pulp Dissolving Pulp Unbleached Kraft Pulp Bleached Softwood Kraft Pulp Bleached Hardwood Kraft Pulp Sulphite Pulp Semi-Chemical Pulp Other Fibre Pulp Recovered Paper Total Billions of CAD$
2007
100,754 182,522 202,550 6,535,222 1,781,837 266,919 1,828,514 12,625 1,018,032 11,928,975 6.65
2008
83,671 269,406 241,663 6,222,838 1,684,730 241,796 1,875,416 14,094 1,257,590 11,891,204 7.32
2009
66,130 271,993 170,516 5,483,615 1,623,040 228,579 1,760,375 23,600 1,294,537 10,922,385 7.20
37,924 267,881 174,444 4,686,343 1,203,322 167,163 1,693,810 15,961 1,699,394 9,946,242 5.25
% Change (08-09) -42.7% -1.5% 2.3% -14.5% -25.9% -26.9% -3.8% -32.4% 31.3% -8.9% -27.2%
14,000,000
14
12,000,000
12
10,000,000
10
8,000,000
8
6,000,000
6
4,000,000
4
2,000,000
2
0
Billions of Canadian Dollars
Metric Ton
Canada Exports of Pulp Products
0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Mechanical Pulp
Dissolving Pulp
Unbleached Kraft Pulp
Bleached Softwood Kraft Pulp
Bleached Hardwood Kraft Pulp
Sulphite Pulp
Semi-Chemical Pulp
Other Fibre Pulp
Recovered Paper
2009
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
54
While offshore sales of various pulp products are on the decline, shipments to China have more than doubled since 2002. It needs be clarified that while customers such as the US, EU27 and Japan are purchasing chemical (kraft) pulp, China is largely importing recovered paper from around the globe. After extracting from recovered papers, the high quality fibres would be fed to the paper mills in China and in turn they would produce high quality paper products for exports. Canada Exports of Pulp Products by Destination, millions of Canadian Dollars United States China EU27 Japan South Korea Indonesia Taiwan India Middle East Other Total
2006
2007
2008
2009
2,810.07 1,136.52 895.78 506.41 374.07 190.37 213.58 120.75 58.01 346.17 6,651.74
3,111.82 1,500.30 818.89 453.52 419.00 232.78 222.33 138.24 88.93 330.01 7,315.82
3,234.73 1,404.47 672.11 418.27 390.47 251.31 197.34 134.30 124.99 374.01 7,202.00
2,162.45 1,459.45 380.83 292.34 234.89 141.63 121.66 136.79 23.82 292.22 5,246.06
% Change (08-09) -33.1% 3.9% -43.3% -30.1% -39.8% -43.6% -38.4% 1.9% -80.9% -21.9% -27.2%
Canada Exports of Pulp Products 12 11 10
Billions of Canadian Dollars
9 8 7 6 5 4 3 2 1 0 1995
1996
1997
United States
1998
1999
2000
2001
2002
China
EU27
Japan
South Korea
2003 Indonesia
2004
2005
Taiwan
India
2006
2007
Middle East
2008
2009
Other
Source: Global Trade Information Services, Inc.
55
After increasing its pulp exports to $3.4 billion in 2007; sales by British Columbia fell back down to $2.9 billion the following year. At the end of 2009, offshore sales fell by 28% to just $2.1 billion. As a whole, Canada’s export sales of pulp products dropped 27.2%, to $5.2 billion, compared to the previous year. Canada Exports of Pulp Products, millions of Canadian Dollars British Columbia Alberta Quebec Ontario New Brunswick Saskatchewan Nova Scotia Manitoba Newfoundland Territories P.E.I. Canada
2006
2007
2008
2009
2,919.33 1,232.17 1,005.00 699.58 413.99 200.46 172.79 8.39 0.00 0.01 0.03 6,651.74
3,423.02 1,211.46 938.40 885.45 478.49 200.58 171.12 6.96 0.13 0.14 0.07 7,315.82
2,924.66 1,429.03 1,051.10 931.73 497.59 195.81 165.27 6.67 0.14 0.01 0.01 7,202.00
2,098.99 1,185.77 693.68 574.10 363.94 192.60 132.01 4.79 0.15 0.00 0.02 5,246.06
% Change (08-09) -28.2% -17.0% -34.0% -38.4% -26.9% -1.6% -20.1% -28.1% 8.2% -100.0% 394.3% -27.2%
Canada Exports of Pulp Products 12 11 10
Billions of Canadian Dollars
9 8 7 6 5 4 3 2 1 0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
British Columbia
Alberta
Quebec
Ontario
New Brunswick
Nova Scotia
Manitoba
Newfoundland
Territories
Other
2007
2008
2009
Saskatchewan
Source: Global Trade Information Services, Inc.
56
BLEACHED SOFTWOOD KRAFT PULP EXPORTS Since plunging to $1.6 billion back in 2001, sales have hovered between $4 billion and $5 billion thereafter. However, the 2009 tally showed that the sales figure fell to just $2.9 billion. Even though the US remains Canada’s largest market, shipments last year fell by another 10%. Since China surpassed EU27 as the second largest market for Canada in 2006, more attention has been placed on China, as their export gap has widened. Canada Exports of Bleached Softwood Kraft Pulp, metric ton 2006 United States China EU27 Japan South Seas South Korea Other
$ / m3
Total CAD $ United States China
2007
3,275,547 1,002,856 858,987 558,875 200,159 198,138 440,660 6,535,222 4,101,765,846 591.92 603.25
2008
3,036,907 1,183,089 724,833 451,396 203,030 170,516 453,067 6,222,838 3,968,457,027 699.15 702.76
2009
2,707,843 1,084,763 552,783 406,629 184,742 136,580 410,275 5,483,615 4,384,357,321 771.80 684.59
2,146,953 1,150,787 448,558 333,455 126,082 126,431 354,077 4,686,343 4,029,217,700 667.08 587.32
% Change (08-09) -20.7% 6.1% -18.9% -18.0% -31.8% -7.4% -13.7% -14.5% 2,942,668,829 -13.6% -14.2%
8,000,000
8
7,000,000
7
6,000,000
6
5,000,000
5
4,000,000
4
3,000,000
3
2,000,000
2
1,000,000
1
0
Billions of Canadian Dollars
Metric Tons
Canada Exports of Bleached Softwood Kraft Pulp
0 1995
United States
1996
1997 China
1998 EU27
1999
2000 Japan
2001
2002
South Seas
2003
2004
2005
South Korea
2006 Other
2007
2008
2009
Exported Value (RHS)
Source: Global Trade Information Services, Inc.
57
CANADIAN PAPER PRODUCTS
Photo Credit: FPInnovations
Canada produces a wide variety of paper products, including newsprint, numerous printing & writing papers, countless household & sanitary paper products, as well as wrapping & packaging paper products. Up until 2006, newsprint represented more than half of Canada’s production volume. Since electronic readers have become more popular and a number of newspapers have gone to online circulation, newsprint demand has plunged. This movement towards electronic communication has also hurt the consumption of printing & writing papers. On the other hand, not only do household and wrapping paper products face stiff competition from similar products made by other countries, they also have to deal with substitute products made with other materials such as rubber and plastic.
58
PAPER PRODUCTS PRODUCTION After a decade of dominance, newsprint no longer represents the majority of paper products manufactured in Canada, as it was overtaken by printing & writing papers. Of the newsprint produced in 2009, close to 90% was exported. While kraft paper and sanitary papers minimized their loss in recent years, communication papers such as newsprint and printing & writing papers have seen their production numbers continue to slide.
Canadian Paper Production, metric tonnes Printing & Writing 6,313,000 6,120,000 6,331,000 6,456,000 7,020,000 6,706,000 6,106,000 5,947,000 5,266,000 4,441,000
Newsprint 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
9,221,000 8,373,000 8,455,000 8,487,000 8,180,000 7,770,000 7,122,000 6,640,000 5,993,000 4,378,000
Kraft
Sanitary
Total
529,000 523,000 538,000 473,000 561,000 560,000 546,000 544,000 543,000 533,000
651,000 684,000 713,000 717,000 747,000 741,000 755,000 754,000 748,000 737,000
16,714,000 15,700,000 16,037,000 16,133,000 16,508,000 15,777,000 14,529,000 13,885,000 12,550,000 10,089,000
Canadian Production of Paper Products 18,000,000
16,000,000
14,000,000
Metric Tonnes
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 2000
2001
2002
2003 Newsprint
2004
2005
Printing & Writing
2006 Kraft
2007
2008
2009
Sanitary
Source: Pulp & Paper Products Council
59
From 2000 to 2005, production of paperboard products by the Canadians hovered around 4 million metric tonnes. However, production volumes have declined gradually thereafter and had fallen to below 3 million metric tonnes by 2009. A closer examination shows that containerboard represented about two-thirds of the production while the remainder is made up of boxboard products. Canadian Paperboard Production, metric tonnes 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Containerboard
Boxboard
Total
3,008,000 2,932,000 2,990,000 2,786,000 2,901,000 2,669,000 2,553,000 2,435,000 2,342,000 1,879,000
1,040,000 1,000,000 1,046,000 1,045,000 1,053,000 1,052,000 1,102,000 1,040,000 897,000 805,000
4,048,000 3,932,000 4,036,000 3,831,000 3,954,000 3,721,000 3,655,000 3,475,000 3,239,000 2,684,000
Canadian Production of Paperboard Products 4,500,000
4,000,000
3,500,000
Metric Tonnes
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0 2000
2001
2002
2003
2004 Containerboard
2005
2006
2007
2008
2009
Boxboard
Source: Pulp & Paper Products Council
60
PAPER PRODUCTS EXPORTS In 2009, export of paper products by Canada was estimated at $10.9 billion, 17% below the previous year. Amid the drop in offshore sales, newsprint and printing & writing papers were two of the largest exports, with each being close to 33%. Since 1995, sales of newsprint have shrunk drastically, from $8 billion to just $2.8 billion. As print continues to shift from paper to digital, exports of various printing & writing papers is expected to face more challenges. Canada’s Exports of Paper Products, millions of Canadian Dollars Newsprint Uncoated Mechanical Papers Uncoated Woodfree Papers Coated Woodfree Papers Coated Mechanical Papers Kraft Papers Tissue & Specialty Papers Boxboard Containerboard Other Paper Products Total
2006
2007
2008
2009
4,903.05 2,789.30 699.88 163.73 847.44 498.95 366.57 480.65 665.77 2,870.66 14,285.99
3,999.91 2,830.76 537.45 82.47 705.66 487.54 362.78 447.84 667.62 2,770.72 12,892.75
4,264.23 3,061.05 560.31 31.58 523.15 545.85 389.40 414.08 662.15 2,705.81 13,157.60
2,803.05 2,711.56 423.65 29.19 417.49 517.10 360.25 458.61 473.77 2,736.17 10,930.84
% Change (08-09) -34.3% -11.4% -24.4% -7.5% -20.2% -5.3% -7.5% 10.8% -28.5% 1.1% -16.9%
Canada Exports of Paper Products 20 18
Billions of Canadian Dollars
16 14 12 10 8 6 4 2 0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Newsprint
Uncoated Mechanical Papers
Uncoated Woodfree Papers
Coated Woodfree Papers
Coated Mechanical Papers
Kraft Papers
Tissue & Specialty Papers
Boxboard
Containerboard
Other Paper Products
Source: Global Trade Information Services, Inc.
61
Since climbing to $18.3 billion in 2001, Canada’s exports of paper products have fallen by about 40%, or $7.4 billion. Amid the downward trend, the industry did have small rebounds in 2004 and 2008. As observed, the eastern provinces continued to lead the way for offshore sales of paper products. Canada’s Exports of Paper Products, millions of Canadian Dollars Quebec Ontario British Columbia New Brunswick Nova Scotia Manitoba Newfoundland Alberta Saskatchewan P.E.I. Territories Canada
2006
2007
2008
2009
6,483.35 3,844.17 1,869.16 846.92 268.56 280.19 448.01 214.24 29.89 1.37 0.14 14,285.99
5,785.49 3,230.07 1,698.44 863.59 530.27 252.78 340.92 177.04 13.22 0.86 0.07 12,892.75
6,101.30 3,239.28 1,774.62 592.15 638.76 282.33 337.14 180.25 10.93 0.82 0.03 13,157.60
5,152.02 2,737.40 1,377.35 616.10 520.53 219.75 166.11 129.62 10.06 1.87 0.03 10,930.84
% Change (08-09) -15.6% -15.5% -22.4% 4.0% -18.5% -22.2% -50.7% -28.1% -8.0% 127.7% 21.3% -16.9%
Canada Exports of Paper Products 20 18
Billions of Canadian Dollars
16 14 12 10 8 6 4 2 0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Quebec
Ontario
British Columbia
New Brunswick
Nova Scotia
Newfoundland
Alberta
Saskatchewan
P.E.I.
Territories
2007
2008
2009
Manitoba
Source: Global Trade Information Services, Inc.
62
After a 2% growth in 2008, exports of paper products plunged 17% in 2009 to just $10.9 billion. As with other forest products, the US continues to be the biggest client for Canada’s paper products; however, shipments to the US in 2009 were at an all time low. Fortunately, sales to other markets such as the Middle East, Brazil and India experienced years of mild growth prior to the 2009 setbacks. Canada’s Exports of Paper Products, millions of Canadian Dollars United States EU27 Middle East Brazil Africa Japan Other Total
2005
2006
2007
2008
12,242.90 478.83 220.40 192.45 119.64 26.83 1,004.93 14,285.99
10,725.61 692.53 244.42 164.60 116.25 21.41 927.94 12,892.75
10,616.04 623.27 391.65 282.70 170.08 16.15 1,057.72 13,157.60
9,090.68 591.96 232.33 205.22 120.88 18.44 671.32 10,930.84
% Change (08-09) -14.4% -5.0% -40.7% -27.4% -28.9% 14.2% -36.5% -16.9%
Canada Exports of Paper Products 20
18
Billions of Canadian Dollars
16
14
12
10
8
6
4
2
0 1995
1996
1997
1998
1999
United States
2000 EU27
2001
2002
Middle East
2003 Brazil
2004 Africa
2005
2006
Japan
Other
2007
2008
2009
Source: Global Trade Information Services, Inc.
63
WOOD MARKET STATISTICS in Including Pulp and Paper
CANADA
