Almost all economic indicators show lumber production and harvesting are accelerating more strongly in the Interior than on the Coast. Among the many reasons:
- Overall lumber prices are up, especially for spruce/pine/fir, the dominant Interior species.
- Stumpage changes give Interior mills a greater advantage
- Rising export volume is helping Interior mills more than Coastal ones.
B.C. government economic data tells the story.
On the production side: Lumber prices are up overall, with SPF 2x4s – the main species used in the Interior – bringing 15.9% more in March compared with the same period in 2010. In that same period, Coastal stumpage rates rose by 22.3%, while Interior stumpage rates declined by 15.4%. The volume of beetle-hit pine processed by Interior mills was a factor. Housing starts in the U.S. and Canada are still down, but softwood lumber export value is up 23.8% from a year earlier. China’s imports of B.C. forest products have more than doubled compared with a year earlier. But percentages are only part of the story. Interior mills turned more than 24 million cubic metres of timber into lumber in 2010, compared with 20.5 million m3 in 2009. Coastal mills processed 2.8 million cubic metres of logs into lumber last year, compared with 2.4 million m3 a year earlier. Interior mills ran more than nine times as many cubic metres through their plants than Coastal mills did.
What about harvest volume?
In 2010, Interior loggers harvested 45.1 million m3, a huge increase from the 36.5 million m3 they logged in 2009. On the Coast, 12.2 million m3 was logged in 2010 compared with 7.9 in 2009.
The Interior harvest increased by twice as much as the Coastal harvest in one year. Overall, almost four times as much timber comes from the Interior than is harvested on the Coast.
There are clearly two forest industries in B.C. Add it up: Rising lumber prices, eased stumpage, more export volume, efficient mills and lower harvesting costs have allowed Interior forest companies to quickly go from a crawl to a sprint in terms of harvesting, output and profits. Interior forest companies are reopening mills at a faster pace than on the Coast, and adding shifts to cope with increased product demand.
Canfor and West Fraser, the two dominant Interior forest companies, both announced major reinvestment programs for the next 18 months to upgrade mills. All this is good news for the Interior lumber industry and communities across this part of the province, but as mentioned in previous articles, there are some dark clouds. Contractor capacity is one, and harvesting rates, frozen or reduced during the downturn, must rise if forest companies are to continue to move ahead. Contractors in the CILA area have some unique problems. We worry a lot more about how to ramp up to meet demand for our services, stave off raids on our skilled operators by other industries, and take advantage of emerging opportunities all around us, than do contractors anywhere else in the province.
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