Canadian Forestry On The Financial Brink

Posted on 05. Feb, 2009 by Ross in North America, Timber Production

The downturn in the global economy has had a massive effect on the price of timber as demand for materials has plummeted, leaving the Canadian timber industry unable to predict anything but doom and gloom. The emerging Asian markets have disintegrated, and their staple sales to the US have plunged with the housing market. Until buyer confidence and mortgage money returns, Americans will continue to not buy or build new houses - new builds are currently down 75% - leaving Canada with no substantial market for it’s most plentiful resource.

Timber prices are currently around $175 per thousand board feet, whilst break-even prices are around $210 per thousand board feet, leaving Canada’s timber industry desperately slashing production to try to match supply and demand in moves similar to OPEC’s response to oil price drops.

As well as slashing production, efficiency savings would also help to sustain profitability, and the Canadian government’s economic stimulus budget affords a genuine opportunity to the timber industry for infrastructure investment which could defend profits on a long-term basis.

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