Day two of the Global Wood Summit in Vancouver opened with a presentation by Alejandra Glazebrook from PwC (Platinum event sponsor). Glazebrook presented insights into the forest sector, highlighting its significant contributions to the Canadian economy, employing over 200,000 people and generating approximately $35 billion. She discussed key trends such as environmental and regulatory changes, technological advancements, community engagement, and global trade dynamics. The presentation also covered the financial performance of the top 100 forest product companies, noting the impact of interest rate changes and shared some key metrics of the industry compared to global markets and GDP. Glazebrook emphasized the importance of innovation and investment in technology as well as collaboration with local communities to ensure the sector’s future success.
Opening the panel on pulp & paper, a detailed overview of trends was presented by Kevin Mason, Managing Director of ERA Forest Products Research. With respect to fibre trends, Mason reported that recycled fibre has become the biggest input for paper and board production—primarily for packaging issues, and end uses have shifted dramatically with paper in steady decline and tissue continuing its relentless growth. In response, there has been a steady stream of paper machines being converted to packaging by companies in North America and Europe—and that trend is expected to continue. Mason added that paper packaging and specialty products should continue to grow, but huge market gains from the ‘plastics-to-paper shift’ are unlikely in the near term. Further, strong growth in the demand for virgin fibre is not a given and supply is increasingly a challenge.
Fraser Hart, Managing Partner at Trade Tree Online, focused his presentation on international markets, and particularly China, given that it has been building a significant amount of new pulp & paper capacity in recent years—51.5M tonnes of paper and board capacity and over 18M tonnes of pulp capacity between 2021-2024. Although wood availability for domestic pulp production will determine the degree to which this growth will continue, Hart said the result has been significant reductions in China’s pulp imports and increases in their imports of wood chips. Not surprisingly, this has depressed pulp prices and forced most North America producers to curtail or close their high-cost operations. Global fibre scarcity is also an issue, especially for BSK (bleached softwood kraft pulp), and BHK (bleached hardwood kraft pulp) continues to gain share. Finally, says Hart, as the lack of fibre and inflationary pressure continues to take out pulp capacity, the next up-cycle in pulp prices will begin to emerge.
Wood fibre expert Bob Flynn, at Timber & Wood, provided an overview of the global wood chip market. The key trends noted, according to Flynn, include that while British Columbia is struggling to find sufficient fibre to feed all existing pulp mills, the US Pacific Northwest has a current surplus, and the US South has a long-term surplus. Further, the European import market for chips is small, and unlikely to expand unless phytosanitary regulations are changed. The Asia-Pacific wood chip import market, mostly Japan and China, has expanded rapidly over the past 40 years. Finally, chip demand will continue to expand for a few years, due to the new mills being built in China, but trade will be limited by available supply.
The next two market panels focused on i) mass timber and lumber futures and ii) forest products transportation and logistics. Moderated by Adera Development’s Sarah Bingham, the first panel featured Michael Wisnefski (at HighGround Trading, USA), Raffaele Parlato (from Hasslacher Norica Timber, Austria) and Patrick Poulin (at Element 5, Ontario). Presentation highlights included: Wisnefski’s explanation of what lumber futures are, how they work and how industry can use them to increase profitability; Parlato’s overview of global increases in mass timber supply and consumption, and his explanation of why his firm is diversifying into North America; and Poulin’s assessment of what it takes for mass timber to be successful in the growing North American market.
The final panel was moderated by ERA’s Claire Huxtable with panelists Remi Lalonde at CN Rail (and former CEO, Resolute Forest Products) and the Port of Vancouver’s Doug Mills. Lalonde reported on the lessons learned from the “perfect storm” in the Winter of 2022—when rail car availability significantly lagged surging forest (and other) product demand. Changes implemented at CN as a result included a substantially increased focus on efficiency (capacity and velocity), redundancy and overall resiliency. Key priorities for CN include positive resolution of the current arbitration process with labour—resulting in a working relationship that avoids future strikes and credibility-harm with forest sector (and other) customers. The Port of Vancouver’s Doug Mill’s presentation focused on the importance but also the challenges of building port capacity—given that port-cargo demand is increasing an average 3% per year.
