Pulp and Paper Canada

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September 24, 2004
By Pulp & Paper Canada

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Canada’s paper industry is on the upswing, according to the Conference Board of Canada. The board’s industrial outl…

Canada’s paper industry is on the upswing, according to the Conference Board of Canada. The board’s industrial outlook has forecasted the industry is moving towards prosperity after hitting the bottom of a cyclical downturn in 2003.

"The good news for the industry is that profits have passed their lowest point, however the recovery will be gradual," said Louis Thriault, associate director of Industrial Outlook. "The stabilization of the Canadian dollar will translate into price increases for exporters and growing demand for paper products will boost production."

In 2003, weak prices and the surge in the Canadian dollar restrained exports to the United States, resulting in poor profits. Revenues are anticipated to rise 8.7% in 2004, only to boost 10.2% in 2005. This revenue growth is expected to offset increases in material costs, producing profits of $1.2 billion in 2004 and $2.6 billion in 2005. Profits will climb again in 2006 to $3.4 billion and hold close to that level through the remainder of the forecast period, which looks ahead to 2008.

The Asian market has been pegged as a hot spot for pulp producers. According to the board, exports to China account for a whopping 12% of all exports, four times what they were a mere decade ago.

Risk for the industry remains a further increase in the Canadian dollar. Escalating energy prices also pose a potentail threat.