BC faces its first year of declining export volumes in years as uncertainty over the direction of the global economy persists.
According to BC Stats, B.C. has had a positive rise in exports over three consecutive years since the global financial crisis hit.
Exports have risen 30% on a seasonally adjusted basis between 2009 and 2011. Nearly half of that increase was between 2010 and 2011.
But what a difference a year makes. So far this year, exports are down 1.7% year-over-year. Increasing pessimism about key global markets appears to be affecting many of B.C.’s export commodities.
Declines have persisted for most of B.C.’s key mining exports year-to-date, including copper (-6.3%), zinc (-10.6%), aluminum (-4.2%) and coal (-11.1%).
This has led to a steady decline in B.C.’s industrial and commercial exports segment.
Bryan Yu, an economist at Central 1 Credit Union, said the combination of falling prices and declining shipments has led to the 2012 declines.
But the biggest contributor to export declines has been from plummeting natural gas prices, which have fallen 39% so far this year. Although prices are expected to stabilize and even rise as winter approaches, Yu doesn’t expect them to rise substantially given North America’s natural gas supply glut.
Despite the challenges facing commodities, B.C.’s export declines have been offset by increases in exports of equipment and machinery and in agricultural, chemical and, most notably, forest products.
While the pulp sector continues to face challenges, softwood lumber exports have grown 6.5% so far this year. Increasingly positive signs of recovery in the U.S. housing market continue to bolster the sector’s prospects.
But the sector continues to face risks in the U.S.
Yu suggested another wave of foreclosures may dampen the current slow recovery, and U.S. politicking will persist into next year.
But B.C.’s forestry sector is primed to lead commodity export growth, boosted by a 20% rise in U.S. housing starts forecast for 2013 and continued market diversification for B.C. wood.
