Forestry News All Good Heading into 2011

Thursday, December 23, 2010 04:14 AM

Victoria, B.C. - Forests, Mines and Lands Minister Pat Bell said today that 2010 is ending on a high note with several clear signs that a stronger, more diverse B.C. forest sector is moving toward a healthy recovery.

"The B.C. forest sector was much busier this year and it appears that the worst of the economic downturn is now behind us," said Bell. "The latest net earnings summary from PricewaterhouseCoopers reported all of B.C.'s largest forest companies showing profits in the third quarter. This is the first time in a decade that we have seen quarterly profits across the board."

Heading into the new year, Asia Pacific's steadily increasing demand for B.C. wood products continues to be the most encouraging indicator that the B.C. forest sector is poised to rebound for a more prosperous future.

B.C. forest product exports experienced a watershed moment in September when, for the first time ever, the relative value of products shipped to China and Japan surpassed the value of forest products shipped to the U.S. The growth of the Chinese market in particular is making up for a U.S. housing industry that remained sluggish throughout 2010. ( see Previous story)

In the month of October, the value of B.C.'s forest product exports (pulp, paper, plywood, OSB and lumber) to China and Japan represented 42.8 per cent, against exports to the U.S. of 40.4 per cent.

The value of forest product exports to China and Japan has increased dramatically over the past five years. China and Japan represented a 17 per cent share of total value in 2005, compared to the U.S. at 68 per cent.

"We have worked hard to strengthen our forest sector by diversifying and opening up new markets overseas," said Bell. "The increased demand from China means more forestry workers are back on the job, more mills are running, and forest-dependent communities are enjoying more economic stability."

Employment is up in the timber harvesting sector by 4,500 jobs over 2009.
The Coastal industry is rapidly recovering with harvest levels up 70.1 per cent year to date. The Interior industry has also seen good growth with harvesting up 24.7 per cent.

Jobs are also up in the wood product manufacturing sector. More than 20 sawmills have re-opened in B.C. in the past year, contributing to an additional 1,400 jobs or a 5.2 per cent increase over 2009.

Lumber prices are another bright spot. Average prices this year are substantially higher with 2x4s selling at $250 per thousand board feet compared to $175 per thousand board feet at the same time last year.

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Posted on Thursday, December 23, 2010 04:14 AM in News by 250 News

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Comments

Posted by: He spoke on December 23 2010 8:17 AM

Thank you Pat

Posted by: bigdog on December 23 2010 8:25 AM

I wonder how many people still feel that all the trips to China were a waste of taxpayers money? Good work, Pat.

Posted by: weaksauce on December 23 2010 8:27 AM

Hmm, doom & gloomers must have overslept this morning.

Posted by: weaksauce on December 23 2010 8:28 AM

Hmm, doom & gloomers must have overslept this morning.

Posted by: He spoke on December 23 2010 8:40 AM

The doom and gloomers, don't get up this early. They live off of the working class, so they typically don't work themselves. thus don't need to be up in the morning.

Posted by: northman on December 23 2010 8:51 AM

Well let me cut the ribbon on Doom & Gloom..
I wouldnt be running out to purchase a new vehicle or house with a new found mill or forest job without some kind of exit strategy.

Good news..Yes...
Progressive news.. Indeed.
Positive news.. Of course..
Transparent News...Not By a long shot!!

I dont know why Pat Bell is hiding his head in the sand without adressing these following snags..I guess its not positive..

1)Are any of you aware of the softwood lumber agreement arbitration which could possibly slap another tarrif on lumber exports to the states? Which the USA has a very good chance at winning? More of this will be known in January.

2)China is only buying our lumber because its at a wholesale price. Most of the lumber they consume is used for concrete forms.If there is a correction in lumber prices to pre 2005 levels we could see a pull back from China.

3)China real estate bubble..which could pop at any minute..and make the US housing market downturn look like pimple on an elephants ass..

Lets remove emotions from the equation here and have a look at the things that could further harm our primary industry and risk manage them..

Posted by: NoSeverance on December 23 2010 9:33 AM

Well I know of at least 3 Canfor Saw Mills that aren't running, Radium, Vavenby, and Rustads. They have been down 1.5 years and the people that worked there have run out of EI. Things are so great in the forest sector that Canfor is permanently shutting down Clear Lake Sawmill in January.

On the positive side Canfor is going to spend 145 million on their sawmills next year. We just don't know where and they most likely don't know yet either.

Posted by: He spoke on December 23 2010 9:49 AM

Oh, there they are. Its the end of the world. sell everything, live high on the hog, were all gonna die.

Well, The fact of the matter is, Canfor does not owe you a living. no one does. you want to put bacon on the table, stop whinning and do something about your employment issue.

Canfor choose to shut down mills to keep the main ship running. No different than you would run your house. You will cut off your house line and keep your cell phone, if things got tight. you would claw back your cable vision. you would turn down the heat at night. you would run thru the house turning off lights. you would be a one vehicle family.

Posted by: He spoke on December 23 2010 9:54 AM

I think China has started to build with wood. not just for forming concrete. They are finding ways to use our cheaper materials for building.

Yep, the americans will continue to think they can dictate the industry, and likely increase our tarriffs to the lumber heading to the south. Eventually, things will get busier in the states, and they will need our lumber. We are just not gonna give it away.

Real estate bubble, it happens everywhere. it goes up, than it goes pop, than it picks itself up. Its been like that for centuries, and likely will not change in our life times. Look at Prince George in the last 30 years, how many boom and busts have we seen.

Posted by: pgguru on December 23 2010 9:56 AM

noseverence,i speculate canfor is about to put another mill or two back online.things are lookin gloomy.the company year and half ago was struggling to survive,now some how we have lumber shortage.many mills have shut down or bankrupt,the world is growing lumber is needed in almost every part of the world.we are about to see what we never seen in our history. a serious lumber shortage,some anaylsis are expecting prices to rocket to 600 to 700 per thousand in the next 2 years.lumber industry has a great 2 decades coming.

Posted by: NoSeverance on December 23 2010 10:33 AM

But don't forget about the serious log shortage in B.C. Even before the economic downturn Canfor was planning to shut down sawmills because there isn't enough logs to keep them all running. Lumber shortage? You bet because there isn't enough trees.

If Canfor was smart they would spend 10 million on severance cut the ties with the 20 year plus employees build a brand new mill at the Rustad's site that employs 8 people and shut down Polar and PG Sawmill. That should keep the main ship running. The 8 people would only be paid 15.00/hr according to the new Steel Workers agreement for the first six months so it's win win for Canfor. That way they could have at least 10 supervisors at that 8 person plant.

Posted by: NoSeverance on December 23 2010 11:08 AM

Posted by: pgguru on December 23 2010 12:54 PM

Month
Click for chart Session Pr.Day Options
Open High Low Last Time Sett Chg Vol Sett OpInt
Jan 11
-
314.90 306.80 308.80 Dec 23, 13:12 308.80 1.80 314 307.00 1584 Call Put
Mar 11 327.50 327.50 318.00 319.00 Dec 23, 13:12 319.00 -0.30 649 319.30 6037 Call Put
May 11
-
332.90 330.90 326.80 Dec 23, 13:12 326.80
-
176 326.80 1994 Call Put
Jul 11 335.00 335.00 334.00 335.00 Dec 23, 13:12 335.00 5.80 52 329.20 738 Call Put
Sep 11 331.00 331.00 331.00 331.00 Dec 23, 13:12 331.00 7.60 4 323.40 134 Call Put
Nov 11
-
318.00 318.00 318.00 Dec 23, 13:12 318.00
-

-
318.00
-
Call Put
Jan 12
-
318.00 318.00 318.00 Dec 23, 13:12 318.00
-

-
318.00
-
Call Put

Click here to refresh data

Posted by: pgguru on December 23 2010 12:55 PM

lumber prices now headed to 400 by the july

Posted by: pgguru on December 23 2010 1:00 PM

this next decade companys will make billions and billions. now is the time to spend big on capital and shape up for this big run.this is why canfor and west fraser have planned!! the survival of the fittest, u.s slaps more tariff on b.c wood,that only means bye bye small fish

Posted by: NMG on December 23 2010 4:10 PM

"But don't forget about the serious log shortage in B.C."

Don't be silly NoSeverance, why would that matter to the viability and/or stability of an industry? Just look to the cod fishing industry for proof on how it can still pull through when the resource is depleted. Oops, my bad. Maybe there is another example out there we can use, LOL.

Posted by: gus on December 23 2010 4:53 PM

Northman wrote:

"China is only buying our lumber because its at a wholesale price"

Okay ....

read my post about the BC Stats numbers, not some mistaken numbers that Palopu had posted.

http://www.opinion250.com/blog/view/18794/3/lumber+exports+to+china+exceed+sales+to+u.s.?id=140&st=10

Here is the revenue per cubic metre for the 15 geographical regions/countries according to BCStats for October 2010
Sorted by revenue per cubic metre

1 Eastern Europe $1,062.91
2 Africa $736.71
3 Mexico $643.34
4 Central America $624.99
5 Western Europe $595.72
6 South East Asia $284.64
7 Japan $276.45
8 India $234.02
9 South Korea $228.78
10 South America $193.14
11 Hong Kong $189.56
12 Taiwan $163.19
13 Mainland China $148.99
14 Middle East $145.44
15 USA $139.37

The USA price is at the bottom. Why should China pay more than the USA on average?

BTW, they have consistently been paying more and the USA has consitently been low.

As I said, we build with matchsticks in North America, something much of the rest of the world does not do.

Posted by: NMG on December 23 2010 4:58 PM

In all seriousness, here are some threats I see to the industry:

- Like others have mentioned, a sustainable long term supply of raw materials
- Stable markets. If the US continues to be in the tank and we don't make as much dough out of China, where will that leave us?
- Competition from Russia over the long term and their proximity to that very same Chinese market we are trying to develop
- Environmental awareness around the globe and whether BC will be seen as a "green" producer of products. This could impact sales and our ability to attract and/or retain customers
- Trade issues with the US
- An aging workforce and demographic shifts that have people being less and less interested in living in rural communities, where these industries typically exist
- Technological breakthroughs that result in alternate productsto what is currently being produced in the wood industry

Posted by: mythoughts on December 23 2010 5:20 PM

He Spoke, you are correct, Canfor does not owe anyone a job. No employer does, but Canfor does owe millions in severance pay to the 3 mills. They are also partners in the Sinclair Group which owns Winton Global and it has been shutdown for 2.5 years now. Canfor is making millions now and spending millions now to fix up their mills and all at the expense of their employees. They need to pay up so these employees can also get on with their lives too. Many of them are still hanging on waiting to hopefully get their jobs back.

Posted by: my2bits on December 23 2010 7:57 PM

Log exports through the port of Prince Rupert were 21,500 tonnes in October, up to 63,324 tonnes in November.

Posted by: DPJ on December 23 2010 9:14 PM

Boom times in Prince George????

Posted by: Palopu on December 24 2010 9:32 PM

Gus. Give your head and your fingers a break. You are in such a hurry to impress us with your vast knowledge you are making a fool of yourself.

My information comes from the same source as yours. ie; BC Stats. So what we have here is a question of interpretation. I suspect that you are using figures that include all forest products exported from BC which would include plywood, cedar shakes, logs, etc; Who knows??

I am using the figures that deal specifically with softwood lumber because that is what we produce the most of. That is what we ship to the USA, China, and Japan, and that is the issue at hand.

If you look at BC Stats ***BC origin Exports to Selected Destinations*** and then look at

1. B.C. Origin Exports to the USA
2. B.C. Origin Exports to Japan
3. B.C. Origin Exports to the E.U.
4. B.C. Origin Exports to Mainland China.

You would see that my figures are bang on. Once again I suggest you slow down, and try to get a better comprehension of what it is you are talking about.

I dont doubt that China is paying more for 1st grade lumber, because of the shipping costs, etc;, however they buy very little quality lumber. The fact of the matter is that most of what they buy is **crap** or utility grade, cants, logs, etc. and they then remanufacture it in China.

Lumber is sold in North America in US Dollars per 1000 FBM. If you look at the top of this page you will see that it was selling to-day for $308.80 US per 1000 FBM.

So all you have to do Gus in get me the rate for lumber sold to China in US Dollars per 1000 FBM. Thats the number that I have yet to see in all the correspendence that has been generated about lumber sales to China. Is it some kind of state secret??????

As a matter of interest, now that the US price of lumber is over $300.00 per thousand Canadian shippers will not have to pay the 15% sales tax, so they should be able to make some money.

Posted by: Palopu on December 24 2010 9:50 PM

PS. Should read Export tax, not sales tax.

Posted by: gus on December 25 2010 1:10 PM

Palopu

You posted the following figure:

Softwood Lumber Exports the USA
October 2010 $189,629,000.00
Year to date $$2,279,386,000.00
================================
Here is the information that is presented for the year 2010 for "BC Exports of Softwood Lumber (440710) by Destination"

For the USA
February 155,255,662
March 172,785,596
April 182,794,051
May 185,896,199
June 213,273,232
July 143,595,696
August 128,424,259
September 121,064,246
October 124,043,682

10 months total 1,545,724,756

That is the total for BC ...

Once again, I do not know where you get your figures from. Please provide the direct link so I can check yours against mine.

Once more, here is my link
http://www.bcstats.gov.bc.ca/data/bus_stat/busind/trade/SWL.xls

Do me a favour, instead of fighting it click through to that link, you will get a spreadsheet, go to the fourth tab on the bottom and check the figures against mine and yours.

Let me know the exact figures you see in Canadian $ for each of the months of January 2010 to October 2010 and give me the total (year to date)

Posted by: gus on December 25 2010 1:22 PM

BTW, Palopu, you wrote: "I suspect that you are using figures that include all forest products exported from BC which would include plywood, cedar shakes, logs, etc; Who knows??"

Palopu, think it through a bit. Your figures are higher than my figures. If mine were to show total exports to the USA as you suggest, then it would be the reverse. But that is not the case.

Posted by: moretaxesplease on December 25 2010 4:38 PM

mythoughts I agree with you, my husband gave 30 years to Winton Global and we all should get severance pay and be able to get on with our lives. They spend thousands on night watchmen around the clock, give it up already and pay do what is right.

Posted by: Palopu on December 25 2010 10:27 PM

You got me on this one Gus. My figures for the USA were the total figures for Forest Products. In fact your numbers are correct. In any event we have been shipping to Japan since the 1960's so I dont see any reason for lumping Japan lumber sales into the China sales to come up with a bigger number. Exports to all three destinations for this year are as follows;

1. To the USA YTD $1,545,725.00

2. To Mainland China $481,060,000.00

3. To Japan $534,949,000.00

If we are going to throw other Countrys or Provinces into the mix then we could include all lumber exports in Canada to the USA as opposed to China, or we could include Europe, and India in the Japanese figures, or what ever mix we wanted. However if we stay focused on what BC Exports to China, versus the USA, and get the distinction between finished lumber as opposed to utility grade lumber, and the volumes measured against revenue received. Then if we factor in the fact that there is no 15% export tax on lumber sold to China, as opposed to lumber sold to the USA when the price drops below $300.00 per 1000 FBM, and remember that on lumber shipped to the USA, BC shippers cannot get a break on stumpage from beetle killed lumber (or any other) because of the softwood agreement, while there is no restrictions on stumpage for lumber shipped to China. (I suspect that BC lumber companies are getting a deal on stumpage for lumber shipped to China)

This scenario works well for China as long as the price of lumber remains below $300.00 per 1000 FBM, however once the price starts to rise, then there is more money to be made by selling finished lumber to the USA.

Another problem that shippers have with the American customers is the fact that the beetle killed lumber is very dry, and has thousands of hairline cracks in it. Some major customers in the US are refusing to buy beetle kill, and once again this lumber can be sold to China on the cheap.

This whole question can be settled by someone telling us in simplistic terms what price we are getting paid for lumber shipped to China.

We know that the American price to-day is $308.80 per 1000 FBM. What is the Chinese price per 1000 FBM in US Funds for prime lumber, and utility lumber. That is the question.