Despite signs that B.C.’s forest and paper industry is on the rise, PricewaterhouseCoopers (PwC) believes it is not out of the woods just yet.
“While we have seen some signs of relief in early 2010, the underlying fundamentals for growth are not yet there for the forest and paper industry,” said Frederic Bouchard, PwC’s Montreal forest, paper and pulp leader. “We anticipate that there could be a slight decline in this rally before a full recovery in 2011 or 2012.”
PwC released its comments just hours before its 23rd annual global forest and paper industry conference began in Vancouver this morning. Caution aside, PwC said commodity prices have shown improvement.
Pulp prices have increased 50% to US$965 per tonne compared with a year ago, while lumber prices have increased to US$305 per thousand board feet, which is a 40% increase from the 2008 average price.
Bouchard said mill shutdowns in the supply side of the market are what’s driving the price and once those upsets are fixed the market could expect to see a decrease in pulp prices.
One of the main themes of today’s conference is transformation through innovation.
Mercer International Inc. (NASDAQ:MERC) operates a pulp mill in Castlegar and will speak at the conference about how the company has weathered the downturn in B.C.’s forest economy.
Mercer CFO David Gandossi recently told BIV the federal government’s green transformation program would upgrade outdated mills across Canada and improve their global competitiveness.
Gandossi said: “What’s so great with the federal money is these are difficult capital expenditures to make for an industry that hasn’t been making a lot of money.”
The $1 billion program allows pulp companies to tap into federal credits and invest in efficiency and renewable energy upgrades at their mills.
Fourteen B.C. mills have received credits under the program.