Forestry exports to grow by 8% this year, driven by sales to the U.S. and China: EDC

Forestry exports from British Columbia are expected to grow 15% this year and another 10% in 2015, according to a May 13 Export Development Canada ...

Forestry exports from British Columbia are expected to grow 15% this year and another 10% in 2015, according to a May 13 Export Development Canada (EDC) forecast released May 13.

This increase will be driven by lumber exports, which are expected to increase 15% in 2014 and a further 10% in 2015.

In addition, the lower Canadian dollar will provide a leg up to pulp and paper sales. 

“In between the United States housing sector recovery and growing demand from China, B.C.’s lumber sector will be scarcely able to meet demand,” said EDC chief economist Peter Hall. “The sector’s ability to overcome those capacity constraints will be key to export growth in this sector.

“Chinese demand alone could grow to over $600 million annually.”

Housing starts in the U.S. are expected to surpass 1 million for the first time since 2008. This year should see 1.2 million starts, the report said, and 2015 will reach 1.4 million.

This would mean good news for Western Canada’s forestry companies, which saw a difficult first quarter in 2014 due to weather and disruptions caused by the truckers’ strike.

Supply will likely be an issue, however, over the next year. As well, 2014 is expected to see mill closures.

“While demand for lumber products is expected to be robust, fibre supply constraints from damage caused by the mountain pine beetle are starting to hit the forest sector in British Columbia,” the report said. “Mills in Houston and Quesnel, British Columbia, are expected to close by mid-2014 due to a lack of timber supply.

“More closings are expected in the medium term which will reduce the volume of British Columbia’s lumber exports, but increase prices, just as demand is growing.”

Total exports in all sectors are expected grow 8% this year and another 7% in 2015.

Other sectors that will see growth, Hall said, were the agri-food and hydroelectric power sectors, both expected to see a 30% jump. These sectors comprise between 4-5% of the province’s total exports.

Forestry exports make up 35% of all of B.C.’s exports – the largest single sector in the province.

ecrawford@biv.com

@EmmaHampelBIV

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