Canadian loggers will experience ongoing demand from residential construction markets
New York, NY (PRWEB) August 25, 2014
The Logging industry in Canada supplies primary wood inputs to sawmills and paper mills for further processing. In the past five years, a boost in construction activity in the United States and Canada has boosted demand for timber, and the industry has been able to increase its harvest to meet downstream forest products manufacturers' needs. However, a continued decline in paper usage has led demand from paper mills to plummet in the past five years, partially stemming revenue growth.
According to IBISWorld Industry Analyst Antal Neville, “Export growth has been a considerable driver of revenue in the past five years.” Demand for lumber plummeted in North America, due to the crash in housing markets in Canada and, to a greater extent, the United States, during the past five-year period. Therefore, loggers sought other markets for their products. A construction boom in China led to rapidly increasing demand for logs in that country, and Chinese wood manufacturers turned to loggers in North America to meet this demand. Industry exports have grown at an astounding annualized rate in the five years to 2014, with the most of this growth coming from China.
Despite growing demand, threats to the industry loom. For the past two decades an epidemic of mountain pine beetles has devastated forests in British Columbia and Alberta. Natural Resources Canada estimates that 50% of British Columbia's commercial lodgepole pine has been killed since the 1990s. Dead trees are still harvestable for eight to 12 years before they begin to deteriorate, but the vastly depleted stock is expected to catch up with the industry in the next five years. Some research suggests that Canada's forests will not be able to sustain demand from downstream sawmill operations, causing number of mills in British Columbia's interior to close shop.
“Depleted forests and a continued decline in demand from paper mills are expected to hinder revenue growth in the next five years,” says Neville. Nevertheless, forecasts for construction activity are strong, and Canadian loggers will experience ongoing demand from residential construction markets in both Canada and the United States, leading to annualized revenue growth in the five years to 2019.
For more information, visit IBISWorld’s Logging in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry buys and leases log-harvesting equipment and vehicles and uses them to fell trees. The trees are then transported as sawlogs to sawmills and pulp mills. The industry excludes companies that are primarily engaged in breeding, planting or growing trees.
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