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Export Development Corporation forecast on forestry

Ottawa, ON — The Export Development Corporation has released its Fall 2007 Global Export Forecast. For the forestr…

Ottawa, ON — The Export Development Corporation has released its Fall 2007 Global Export Forecast. For the forestry sector, they forecast an 8.3% decline in exports for 2007, noting that the high Canadian dollar, increased energy costs and a weaker US economy contribute to this decline. However, the outlook for 2008 is more positive, with a 3.5% growth in forestry exports, based largely on higher prices in the pulp and paper sector.

The forestry industry in British Columbia accounts for half of the forestry industry in Canada; it is also responsible for 40% of all exports from that province. Total forestry exports in BC are forecast to decrease by 6.5% for this year, with a 4.4% growth in 2008. The sharpest decline will be for lumber and wood products, which are forecast to show a 15% decline in 2007, but this will be offset somewhat by increases in pulp exports, particularly to China.

Forestry products represent 16.5% of the exports from Quebec, they are set to decline by 9.4% this year, according to the EDC’s outlook for Quebec. An additional factor here is the government-mandated 20% reduction on allowable cuts (Bill 71), which will reduce timber exports. There will be some growth in 2008, forecast at 3.5%, as plant closures may rebalance the supply conditions and help prices become more favourable.

In New Brunswick, forestry makes up almost 20% of all exports. The outlook here is for continuing decline in exports for the sector as a whole, 2.2% in 2007 and 7.1% in 2008. For wood exports in particular, the forecast for 2007 is a 35% decline, due to reduced demand in the US which has caused significant shutdowns and curtailments in the province, but an increase of 7% in 2008 as supply rebalances. Pulp exports will be positive, expanding 26% in 2007 and 7% in 2008. The forecast for paper exports is mixed, with an increase of 12% this year, but a decline of 23% in 2008.