Canada’s paper industry will be profitable again some day, but that day is not today.
The country’s pulp and paper industry is set to return to profitability next year after losing more than $5 billion over the last seven years, according to a Conference Board of Canada report released Thursday morning.
The report, Canadian Industrial Outlook: Canada's Paper Products Industry - Spring 2010, indicated that price increases and demand recoveries are helping the industry shuffle toward improvement.
“However, a robust recovery is not expected and industry revenues will be smaller in the future than they were at their peak in 2000,” said Michael Burt, the conference board’s associate director of industrial economic trends.
The report also said Canada’s paper industry had a second consecutive annual pre-tax loss of more than $1 billion in 2009.
Those losses are projected to shrink to $139 million this year.
As of May 25, the price for a tonne of industry standard northern bleached softwood kraft pulp was US$984. That’s compared with a 52-week average price of US$800 per tonne, and a price that hovered just above US$600 per tonne a year ago.
At a forest, pulp and paper conference held in Vancouver earlier this month, PricewaterhouseCooper’s Canadian pulp and paper leader Bruce McIntyre said demand has little to do with the price recovery.
“It’s still a very weak sector,” McIntyre said. “It’s a supply driven improvement, and it will depend on the industry maintaining production discipline to maintain that price increase.”