For at least the past five years, forestry companies have lamented the strong Canadian dollar. For Canada’s manufac…
For at least the past five years, forestry companies have lamented the strong Canadian dollar. For Canada’s manufacturing industry, a bold loonie makes selling product in the U.S. a difficult venture, and pulp, paper and forestry firms have witnessed the devastating effects on their bottom lines.
The Canadian dollar plunged below 80 cents on Wednesday, but instead of rejoicing, forestry firms are now contending with a weakened U.S. market.
“The drop in the value of the Canadian dollar would make a big difference if there was more of a market for our products,” the Nanaimo Daily News reported Duncan Kerr, CEO of Western Forest Products as saying. “The housing bubble in the U.S. had ended and there appears to be a recession coming which means housing starts will continue to be on the decline so a lot of our products have nowhere to go, despite the dollar,” he said. The company is running its facilities on Vancouver Island at 65% capacity until markets pick up, the Nanaimo Daily News confirmed.
One bright light, the report noted, is a scheduled log export tax on Russian lumber flowing into China, who buys roughly 27 million cubic metres from Russia every year. Logs will be subjected to an 80% export tax, creating opportunity for North American companies. “It’s expected Chinese imports of Russian logs will decrease to about seven million cubic metres,” the Nanaimo Daily News reported Gerry Leeuwen, analyst for International Wood Markets as saying, “which leaves a hole for a market for 20 million cubic metres of lumber which we could help fill.”
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