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Forestry sector facing challenges

Forestry sector facing challenges

Posted on: 8/14/2019 | Author: ATB Economics

​​The first half of 2019 has been hard for Alberta’s forestry sector. Over the first six months of 2019, exports of wood products were down 20.7 per cent compared to the first six months of 2018, dropping from $990 million to $785 million.

Wood product exports to the United States account for more than 90 per cent of all foreign sales. These were down 19.7 per cent, compared to the 30.0 per cent drop in sales to all other countries.

Paper manufacturing fared better, with its international exports increasing by 1.5 per cent over the first half of 2019 compared to the same period last year (from $1.042 billion to $1.058 billion).

Lumber prices have been generally lower in 2019. The average benchmark price* for framing lumber was US$350 per thousand board feet from January to July of this year—down 23.9 per cent compared to the 2018 average of US$460.

Price fluctuations, flagging exports to the U.S., forest fires, the mountain pine beetle, U.S. tariffs on Canadian softwood and increased foreign competition all create challenges for the industry, and the current slow pace of home construction in the province doesn’t help. With luck, market conditions will improve, allowing Alberta to avoid the mill closures that have been afflicting British Columbia’s forestry sector.

*The benchmark is the Framing Lumber Composite Price calculated by Random Lengths ​.

Forestry August 14 2019, graph​​

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