Kevin Mason
Economic Outlook: Risks abound for 2026 and beyond but we see little chance of upside surprises for global GDP growth next year. Instead, we forecast modest declines in both US and Chinese GDP in 2026, with the Eurozone growth rate nudging up slightly from depressed levels. US-driven tariffs will stabilize but remain a drag and may become the norm for the next three years. As we’ve noted before, demand won’t be driving upside for the forest sector. Interest rate relief in the US continues to lag earlier expectations (with two further, 25bps cuts expected next year), and a US housing recovery will likely be pushed out to the second half of 2026 at the earliest (potentially 2027). A further weakening of the USD relative to other major currencies will create additional headwinds for US-based producers focused on exports but should also put downward pressure on US imports.
Forest Products Outlook: For most markets, the first half of 2026 will look a lot like 2025, with oversupply resulting in weak prices and lacklustre earnings. Highlights include:
- Housing starts will slip next year to 1.33MM as mortgage rates are expected to move only moderately lower. Affordability issues persist.
- Log prices should trend sideways, with some markets up and others down. Demand from China could rise as its US log ban has ended.
- Lumber prices will move up in 2026 as supply reductions related to high costs (duties, tariffs, etc.) begin to bite harder.
- Panel prices are likely to remain rather low in 2026 due to OSB (particularly) facing oversupply issues as a couple of mills ramp up.
- Pulp prices hinge on supply dynamics; the situation has changed as China has boosted its internal supply. Although prices are moving off their lows, shuts are needed to maintain upward momentum.
- Newsprint demand will drop by double digits next year, but, with some mills currently offline, prices should hold until supply restarts.
- Paper prices will be mixed, with expectations for an increase in uncoated woodfrees; most other grades should hold at/near year-end levels. The removal of tariffs would push prices lower.
- Containerboard producers are expected to drive a price hike in Q1 given the massive capacity shuts this year. Demand will remain sluggish, but rising box shipments aren’t needed to support hikes.
A central pillar of US President Trump’s protectionist trade policy could be struck down early in the new year, but lawyers and trade experts expect the President to rapidly reconstruct his tariff regime using other legal tools while questions remain about whether companies will be able to secure refunds. …A negative decision would be an indictment of the haphazard way Trump has pushed through his protectionist agenda over the past year, and would create a headache for the US government, which has collected more than US$130-billion in tariff revenue using IEEPA that may need to be refunded. …Dozens of companies have already filed lawsuits in the US Court of International Trade to try to protect their right to a refund or position themselves at the front of the line for one. Canada has less of a stake in the Supreme Court case than some other countries. [to access the full story a Globe & Mail subscription is required]
President Trump has delayed new tariff increases on upholstered furniture, kitchen cabinets, and vanities for a year, pushing their implementation to 2027, according to a 
After decades of protests, environmental violations, government fines, and civil claims, it’s the end of an era. Crofton’s embattled pulp mill is shutting down after 68 years, leaving 350 workers without jobs and destabilizing dozens of businesses in the region. “The Crofton mill has been challenged for some time now,” Domtar’s Steve Henry said in December 2025. …The mill was once part of a recycling system of sorts; it was designed to turn waste from sawmills into energy, pulp, and paper. But a wave of sawmill closures has decimated BC’s pulp and paper industry. …The Crofton mill was so starved for feedstock it was reportedly importing wood chips from the US. …It’s possible that Domtar will try to sell the mill, or that it could become a worker-invested partnership like the Harmac mill, but prospective purchasers will certainly be wary of the toxic baggage and legal liabilities it carries.
Since 2018, notes forestry watcher David Elstone, the British Columbia government has introduced more than 43 measures, policies, plans, systems, laws, reviews and reports about and affecting the BC forest sector. Meanwhile, there have been a series of closures and curtailments (permanent, temporary or indefinite) of sawmills and pulp mills, and thus workforce reductions. “And the fibre-supply crisis has continued to worsen, and . . . the industry is in far worse condition than ever before.” Elstone’s basic message: “Government has been busy designing change rather than figuring out solutions and moving forward. …Kim Haakstad, CEO of the BC Council of Forest Industries (COFI) echoes the analysis “There’s been a significant amount of change that hasn’t settled itself into the system, and there’s been no look at what regulatory efficiency can be achieved to make processes clearer, more transparent, and more accountable.”
MACKENZIE COUNTY, Alberta — An agreement with Calgary-based PowerWood Canada Corp. will bring two new wood pellet manufacturing facilities to the Mackenzie County region in Northern Alberta, Canada. Josh Knelsen, Mackenzie County Reeve, announced Dec. 23 the agreement. “This is a leading-edge, first-of-its-kind project in Canada that turns wildfire-damaged wood into clean energy and helps reduce reliance on coal,” said Knelsen. The two facilities represent the potential for up to 300 direct jobs,” with many more across forestry, construction, transportation, and local businesses. …Construction on two sites is expected to begin by mid-2026. …The facilities will also see the introduction of Canada’s first steam explosion pellet production process – developed by leading industrial systems engineers Valmet and capable of producing black wood biofuel pellets with 94% less carbon release than coal. …PowerWood Canada plans to open a second Alberta plant and has developed expansion plans for further plants in New Brunswick and Nova Scotia.
WASHINGTON — A mandatory review of the Canada-U.S.-Mexico-Agreement on trade kicks into high gear this year as US President Trump continues his campaign to realign global trade and poach key industries from America’s closest neighbours. …Since the president’s return to the White House, however, confidence in CUSMA’s future has waned. Trade with Canada may not be front of mind for Trump, said Fen Osler Hampson, a professor of international affairs at Carleton University in Ottawa and co-chair of the Expert Group on Canada-U.S. Relations. It’s more like the “proverbial iceberg,” he said. “It’s what you don’t see that matters. And that’s the kind of hidden economic wiring of a very deep and highly interdependent relationship.” …Trump has complained repeatedly about long-standing irritants in the United States’ trade relationship with Canada — the supply management system for dairy products, the alleged subsidization of the softwood lumber sector, other non-tariff barriers.
The Scierie St-Elzéar in Quebec, Canada, isn’t just a lumber mill; it’s a glimpse into the future of forestry. A $32.7 million investment in modernization, particularly in artificial intelligence (AI) and automation, is transforming the 80-year-old cooperative into a highly efficient, technologically advanced operation. …The core driver behind this shift is a growing labor shortage. …The St-Elzéar mill has reduced the number of personnel needed for planing operations from 16 to 8, while tripling productivity and boosting product quality by nearly 50%. This isn’t about replacing workers; it’s about shifting their roles. …The integration of AI isn’t limited to a single process. At Scierie St-Elzéar, AI-powered systems now identify wood species, allowing for the creation of more homogenous lumber batches for drying – a critical step in quality control. 
Plywood importer InterGlobal Forest, which is seeking a rehearing of its case challenging CBP’s finding that it evaded antidumping and countervailing duties on plywood from China, 
Lumber futures slid below $530 per thousand board feet, testing the lowest levels since October 2024, as weak near-term demand collided with abundant and re-emerging supply. Homebuilding activity remains subdued and mortgage borrowing costs are still elevated, restraining new starts and repair and remodel demand, while US housing starts have softened and 30-year mortgage rates entered January little changed near the mid-6% range. At the same time structural supply pressures are returning, with several panel and OSB mills ramping up or preparing to add capacity and shifts in North American output seeing Canadian curtailments largely offset by higher production in the US South, keeping physical availability ample and capping any upside. In the meantime, inventory and futures market activity increased over the holiday period, amplifying downside moves when buyers stayed sidelined after year-end and seasonal restocking remained muted. [END]
Long-term mortgage rates have been declining since mid- 2025 and ended the year at their lowest level since September 2024. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.19% in December, 5 basis points (bps) lower than November. Meanwhile, the 15-year rate declined 3 bps to 5.48%. Compared to a year ago, the 30-year rate is lower by about half a percentage point, or 53 basis points (bps). The 15-year rate is also lower by 45 bps. …Falling lower mortgage rates have started to translate into gains as existing home sales edged up slightly in November. However, this increase remains limited as mortgage rates above 6% are still considered elevated. Nonetheless, as financing costs continue decline, more households are likely to reenter the housing market. …NAHB expects the 30-year mortgage rate to average 6.17% in 2026 and would reach 6% by 2027.
KUCHING, Malasia — Chinese timber companies are struggling in their businesses due to insufficient orders for their products amid a weak global market. They have complained about poor demand in the timber market and intense competition in terms of product prices. Adding to their woes are rising raw material costs, according to the key challenges reported in the Global Timber Index-China Index report in November 2025. …To mitigate the challenges, Chinese enterprises suggested the need to expand into international markets to increase the volume of orders for their products, and called for government policy support for their operations. …Back home, China reported strong domestic retail sales of furniture, reaching 17.9 billion yuan in October, a 9.6 per cent increase from a year ago. …In a related development, China reported a robust export market for its particleboard, which surged by 67 per cent in volume.
The BC Conservative leader fostered fear and falsehoods in his 
VICTORIA — The BC government says cutting red tape has allowed provincial pulp mills to more than double their use of timber salvaged from forest fires. The Ministry of Forests says in a statement that mills processed more than one million cubic metres of wildfire chips in 2024-25, up from 500,000 cubic metres in 2023, and representing about seven per cent of all processed wood. Forests Minister Ravi Parmar says that BC can’t let anything go to waste, including logs that have been burned in wildfires.” The statement says pulp mills rarely accepted burned timber before 2022, but both government and industry recognized the opportunity of turning wildfire-affected fibre into wood chips. It says that faster permitting and stronger partnerships between government and industry made it even easier to use that type of timber and the work will continue in 2026.
In 2025, the BC Wildfire Service (BCWS) worked tirelessly with people and communities to fight wildfires and build community resilience throughout the province. “We’re coming off our second-worst wildfire season in Canadian history,” said Ravi Parmar, Minister of Forests. “From technology to equipment and training, all to protect people and communities, the BC Wildfire Service has shown us that they are a global leader in wildfire work. Thanks to the dedicated members working tirelessly to fight the threat of wildfire. In 2026, we will raise the bar even higher. …Since April 1, 2025, more than 1,350 wildfires burned an estimated 886,360 hectares of land in B.C. The 2025 season compared to the past five years:
Between the attention on forests at COP30, emerging regulations, and many corporate pledges, 2025 was slated to be the year that companies eliminate the practice within their supply chains of clearing forests and natural landscapes for production. As the calendar has turned to 2026, the truth is that we now know that dozens of the most at-risk companies have not reached that goal – but a few market leaders are proving that cleaning up supply chains is possible. Let’s be clear: Protecting forests makes economic sense. Industries depend on the benefits that natural ecosystems provide to grow food, transport goods, and manufacture products. Harming nature poses compounding financial risks to companies and their investors. …Growing awareness of the risks of biodiversity decline and the advantages of acting quickly have spurred private sector action in recent years, and we saw more positive developments unfold last year.
USDA on Monday published a notice in the Federal Register looking to update the reporting requirement for foreign land ownership under the Agricultural Foreign Investment Disclosure Act (AFIDA). …The proposed changes come as Congress and state lawmakers have demanded more updates and better reporting on foreign ownership from USDA, spurred mainly by Chinese ownership of agricultural land. …USDA’s latest report on foreign agricultural land holdings shows people from outside the country own nearly 45 million acres of land, as of the end of 2023. That takes up about 3.5% of all privately-held agricultural land. Foreign holdings also increased by more than 1.5 million acres from 2022. Nearly half of foreign land holdings, 48%, are forest land, with 29% being cropland and 21% pastures. Canadian investors make up about one-third of all foreign holdings, or 15.3 million acres, followed by the Netherlands, Italy, the United Kingdom and Germany.
OREGON– The Bureau of Land Management’s state office in Oregon increased its timber sales in 2025, leading to one of its largest years for sales by board-feet and dollars in decades. The increase coincides with a provision of the tax and spending bill approved by Congress in July, that requires BLM to increase the timber it makes available for harvest by 20 million board-feet each year through 2034. BLM data show that the timber sales through the office totalled 290.6 million board-feet this year, an increase of 66.8 million from the previous year. …2025 was the third-highest year for BLM timber sales through the Oregon office by both board-feet and sale price, topped only by 2019 and 2021. Sales this year brought in $63.7 million.
Australia’s trees must contend with many lethal factors, from intense megafires to introduced diseases and invasive species. But beyond these specific pressures, new research indicates the underlying natural death rate of trees in major forests across the country is rising. This increase in tree deaths is due to higher average temperatures from climate change, according to a study 
WISCONSIN — Hayward is the “first choice” for a German company considering building a $1.5 billion plant to convert wood and wood waste into sustainable aviation fuel, but the company also is talking to Minnesota, Michigan and other states, said Matthias Mueller, CEO of Synthec Fuels. …Hayward has good access to energy and to rail and highway transportation, it is not far from the Minneapolis and Chicago airports, and it is home to Synthec’s partner Johnson Timber, Mueller said. European investors have committed to providing $1.5 billion to build that plant, but Wisconsin lawmakers are working to make the state more attractive with the Forestry Revitalization Act that would provide $210 million in tax credits and loans. …The proposed plant annually would use 890,000 tons of woody biomass to produce 48 million gallons of sustainable aviation fuel. 
Forest management has entered a phase defined by competing pressures. Fire risk is rising. Biomass residues are accumulating. Carbon accounting expectations are tightening. Pyrolysis has emerged as a technical lever capable of addressing these constraints simultaneously. Its value lies not in abstract sustainability claims, but in its operational and ecological consequences when integrated into forestry systems. Reducing Fuel Load and Wildfire IntensitymOne of the most immediate benefits of pyrolysis in forest management is fuel load reduction. Thinning operations, deadwood removal, and post-harvest residues generate large volumes of low-grade biomass. When left unmanaged, this material increases wildfire probability and severity. …When treated as an ancillary technology, pyrolysis underperforms. When embedded as a strategic tool, it amplifies the effectiveness of existing management practices. Pyrolysis contributes by connecting fuel reduction, carbon management, soil health, and economic viability within a single operational logic. 
Last year will be remembered as a real test of commitment for the global sustainability agenda. Political uncertainty and regulatory rollbacks, particularly the weakening of flagship EU legislation such as the Corporate Sustainability Reporting Directive and yet another delay in enforcing the European Union Deforestation Regulation, signal a troubling loss of resolve. These decisions reward inaction and deter the very ambition needed to secure long-term economic and environmental resilience. But the crisis of nature loss should not be left to the shifting winds of policy; it requires businesses to step forward and lead the way. As we enter 2026, a pivotal triple-COP year for climate, biodiversity and desertification, it’s time to look past the political noise. While compliance meets today’s requirements, only a deeper commitment to the environment can protect a business against the lasting costs of nature loss. 
