Life After the Beetle- Fibre Supply and the Future of the BC Interior and Coastal Forest Industries

Transcription

1 Life After the Beetle- Fibre Supply and the Future of the BC Interior and Coastal Forest Industries Forest Nursery Association of BC Vernon Oct 1, 2013 Murray Hall

2 Life After the Beetle

3 Life After the Beetle- Its All Over Including the Crying.Lest We Forget Over 15 Major Mills Have Closed Since 2005 Winton Global Bear Lake-2008 Canfor Mackenzie A-2008 Conifex Site 1 Mackenzie-2008 Canfor Rustad Bros Prince George-2009 Stuart Lake Lumber Ft St James-2007 McBride Plywood-2009 Canfor Tackama Fort Nelson Plywood and Lumber-2008 Tolko Creekside Williams Lake-2011 West Fraser Northstar Quesnel-2010 Lytton Lumber-2008 Valemount-2008 Weyerhaeuser Kamloops-2009 Canoe Sawmill-2008 Tolko Kelowna Plywood-2011 Weyerhaeuser OK Falls-2008 Canfor Clear Lake Prince George-2011 Ardew Merritt-2013 Plus numerous small operators

4 Life After the Beetle Predictions for the Interior in 2010 and then in 2012 More BC sawmills will close by the midterm Sawlog timber harvest will drop from the 2005 peak by almost 20 million m3 The economics of MPB Shelf-Life remain a major variable on the future of harvesting MPB logs in BC BC lumber production will fall significantly by the end of the decade but should see higher prices Net Outcome: The BC lumber industry will complete a permanent downsizing by the end of this decade. This ongoing reduction in lumber produced will cause a supply gap or super cycle with rising prices in the North American market forecast.

5 Life After the Beetle British Columbia Interior Coniferous Sawlog Availability Forecast vs AAC (Crown + Private) 70,000,000 60,000,000 Volume (cubic metres) 50,000,000 40,000,000 30,000,000 20,000,000 10,000, Historic Sawlog Harvest AAC Forecast (Crown + Private) Forecast Sawlog Availability

6 Life After the Beetle 16,000,000,000 British Columbia Interior Lumber Production 14,000,000,000 12,000,000,000 Volume (FBM) 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000, Actual Lumber Production Forecast Lumber Production

7 Life After the Beetle 60,000,000 British Columbia Interior Sawlog Supply Vs Demand 50,000,000 Volume (cubic metres) 40,000,000 30,000,000 20,000,000 10,000, Historic Sawlog Harvest Forecast Available Sawlogs Mill Sawlog Demand

8 Life After the Beetle BC Interior Residual Chip Supply Vs Demand 20,000,000 18,000,000 16,000,000 Volume (cubic metres) 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, Forecast Available Residual Chips Historic Residual Chip Supply Pulp & Paper Mill Demand

9 Life After the Beetle British Columbia Interior Sawdust & Shavings Supply vs Demand 6,000,000 5,000,000 Volume (cubic metres) 4,000,000 3,000,000 2,000,000 1,000, Historic Sawdust & Shavings Supply Forecast Sawdust & Shavings Availability Interior Demand

10 Life After the Beetle BC Interior Summary: Many mills have closed- up to a dozen more are forecast to shut Mid-term BC Interior lumber production 9.3 billion Down from 15 billion (2005) Less residual chips more whole log chips Is this higher cost sustainable?... Depends on the mill Sawdust demand vs supply intense Is it sustainable? Depends on the business model

11 Life After the Beetle What About the Coast? Different Industry Markets Fibre Supply Costs Interior and Coast tied at the hip by fibre How does the Beetle impact the Coast?

12 Life After the Beetle What About the Coast? 30,000,000 Region 9 (Coast) Coniferous Log Availability Forecast vs AAC (Crown + Private) 25,000,000 Volume (cubic metres) 20,000,000 15,000,000 10,000,000 5,000, Historic Log Harvest Coniferous Log Availability Forecast AAC Forecast (Crown + Private)

13 Life After the Beetle What About the Coast? 16,000,000 Region 9 (Coast) Log Supply Vs Demand 14,000,000 Volume (cubic metres) 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, Historic Log Harvest Forecast Available Logs Mill Demand

14 Life After the Beetle What About the Coast? 30,000 Coastal Log Demand Forecast 25,000 '000 Cubic Metres 20,000 15,000 10,000 5, Sawlog Demand Shake and Shingle Demand Logs Used for Pulp Chips Crown AAC + Private Contributions Veneer Log Demand Post and Pole Demand Log Exports

15 Life After the Beetle What About the Coast? 12,000,000 Region 9 (Coast) Chip Supply Vs Demand 10,000,000 Volume (cubic metres) 8,000,000 6,000,000 4,000,000 2,000, Forecast Available Residual Chips Historic Residual Chip Supply Pulp & Paper Mill Demand

16 Life After the Beetle What About the Coast? 1,200,000 Region 9 (Coast) Sawdust & Shavings Supply vs Demand 1,000,000 Volume (cubic metres) 800, , , , Historic Supply Forecast Regional Supply Regional Demand

17 Sawmilling on the Coast? 25 Primary Sawmills Remain 3 to 5 at risk in the medium term WFP investing in mill productivity and improved LRF 2 Plywood/ 1 Green Veneer Solid markets with growth at Coastland Nanaimo Shake and shingle in decline Markets disappearing Cedar in the timber profile declining Export of logs to China, Japan and Korea should continue at 25% of available sawlogs

18 Pulp and Paper Mills on the Coast? Neucel Pt Alice New owner- Fulida Dissolving pulp Age and infrastructure an issue Harmac Against all odds- employee owned success story Howe Sound Pulp & Paper New owner- Paper Excellence less market pulp/more corporate use Power production key new market Catalyst $ losses an issue Decline in paper markets

19 Life After the Beetle What About the Coast? BC Coastal Summary: No new sawmill capacity forecast Unless the export profile (and higher log cost) can be utilized Pulp mill consumption of (higher cost) whole log chips inevitable Impact of MPB Coastal pulp/paper mills at risk- paper..yes Market pressures, social media and shift to electronic Fibre supply pressures Coastal sawdust/shavings surplus continues Sawdust opportunity for pellets or power

20 Life After the Beetle Questions Murray Hall 1250 Kathleen Dr Duncan