Financial Reports & Markets
NRCan releases stats on pulp and paper sector in 2019 annual report
Natural Resources Canada's annual forests report for 2019 details shifts in employment, earnings and exports for pulp and paper between 2017 and 2018
By Kristina Urquhart
The pulp and paper manufacturing sector in Canada experienced lower earnings and employment but higher exports in 2018 over the year prior, according to Natural Resources Canada’s annual report on forests.
On May 20, the government agency released the 2019 edition of The State of Canada’s Forests, which includes statistical data for the forestry, pulp and paper, and wood products sectors between 2017 and 2018.
Canada’s forestry sector accounted for about seven per cent of the country’s total exports in 2018 and contributed about $25.8 billion to the economy.
The highlights for the pulp and paper industry are as follows:
Employment, earnings down
The total forest sector employed 210,615 people between 2017 and 2018.
Employment in pulp and paper manufacturing decreased between 2017 and 2018 by 1.65 per cent.
In 2018, pulp and paper manufacturing saw average earnings decrease by 5.1 per cent.
Pulp and paper manufacturing has experienced decline in average earnings between 2016 and 2018, and the report – written before the coronavirus crisis – says the sector may continue to be affected by market conditions.
The pulp and paper sector spent $741.6 million on capital expenditures in 2018, and $1.05 billion on repairs in 2017.
Production of wood pulp and newsprint fell between 2017 and 2018. Wood pulp production is expected to stay stable or decline slightly, while production of printing and writing paper and newsprint are expected to keep declining.
Exports see increase
Total forest products exports have grown for the sixth year in a row, up 7.6 per cent from the 2017 value of $28.3 billion.
The export value of wood pulp grew 18 per cent between 2017 and 2018, and printing and writing papers exports increased 17 per cent, both due to a rise in prices.
Export values of some pulp and paper products such as newsprint are expected to decline as demand from China drops off and as digital media proliferates.
Pulp experienced an 18 per cent trade surplus, and paper products saw a 34.3 per cent trade surplus in 2018.
Opportunities for growth
The report identifies globalization as both a means to new markets and a challenge. International companies are interested in investing in pulp and paper in Canada, but there are also competitors emerging in South America, Russia and Europe.
Other challenges facing the pulp and paper industry include the continuing decline demand for paper products. Weak demand decreased the real GDP for pulp and paper by 1.3 per cent, to $7.84 billion (calculated in constant 2012 dollars).
The report expects that stronger demand for pulp will have helped the forest sector to grow in 2019.
While the Canadian forest industry’s total greenhouse gas emissions from fossil fuels has decreased over the last decade – between 2006 and 2016, energy use was reduced by 25 per cent and total fossil GHG emissions were reduced by 38 per cent – the report highlights the need for low-carbon projects that support the bioeconomy, including lignin extraction and production of cellulose nanocrystals.
“Our forests provide much of the feedstock for the emerging bioeconomy, which uses sustainably sourced biomass to create products such as bioplastics, biochemicals and biofuels,” says Seamus O’Regan, minister of natural resources, in the report’s introductory message.
“These biofuels are being used to generate heat and power, including in remote communities, thereby displacing higher-emitting fuels such as diesel.
“Wood is also part of innovative new materials that are making Canada a leader in tall wood construction. This contributes to a low-carbon future by reducing the use of non-renewable materials.
“Canada’s sustainably managed forests have been a major part of our history. As this report makes clear, they are also crucial to our future.”
Read the full Natural Resources Canada report here.