Sandy helps boost demand for New Brunswick lumber
U.S. housing market also turning around, analyst says
A forest industry observer predicts New Brunswick mills will see strong demand for their lumber for the next four to five years.
Mark Kennedy, a forest products analyst with CIBC, says housing construction in the United States is finally turning around after four dismal years.
He expects damage in the northeastern United States from superstorm Sandy will continue to bolster demand, which is good news for the province's forestry industry, which employs about 10,000 people.
"It's probably going to take the better part of a month to six weeks for that demand to really start showing up, but basically there is an awful lot of repair and renovation-type work to do," said Kennedy.
"I suspect … what we will see happen is that people who have to do repairs to their homes might also decide to do some extra renovations they've been thinking about anyway. And so that all just continues to add to lumber demand here on the margin."
New Brunswick exports about 80 per cent of its finished wood products to the U.S.
Prices also on rise
Lumber prices will likely increase, along with the increase in demand, said Kennedy.
Don Floyd, the Dean of Forestry at the University of New Brunswick in Fredericton, says the price of lumber is already trending upwards.
"Basically the sale price of lumber, delivered into the U.S. right now, is up about 13 or 14 per cent from where it was a year ago," he said.
Still, the price increase doesn't make up for the lost trade advantage Canadian mills had when the Canadian dollar was trading at 80 cents US, said Floyd.
Woodlot owners are also concerned about the rock bottom prices for softwood pulp, said David Palmer, of the York Sunbury Charlotte Forest Products Marketing Board.
"When I started working at the marketing board in 1988, you could get $100 for a cord of pulpwood," said Palmer. "And today, the price is in the vicinity of $80, $82, $84 a cord."
Woodlot owners are still waiting for the province to help negotiate a fair price and a larger share of the market for pulp, Palmer said.
Earlier this year, J.D. Irving Ltd. shut down its sawmills in Kedgwick and Doaktown, citing poor market conditions. It also closed its Deersdale and Clair mills last fall, due to economic conditions in the United States and uncertainty about supply.
A mill in Miramichi officially reopened on Nov. 2 after being closed for almost six years.
The mill, now owned by Arbec Forest Products Inc., of Quebec, is expected to reach full operation by the spring of 2013, employing more than 100 people.