Selective Cuttings

Wood pulp exports very stable

May 6, 2013

Canada’s wood pulp exports have been stable since 2001, which masks a slow (but steady) change in export composition as a result of changing consumer trends.

Canada’s wood pulp export trends (1995-2012)

This graph shows the value of Canada’s wood pulp exports for the 1995-2012 period, including NBSK, semi-mechanical, dissolving and other pulp products. The export value has been very stable since 2001, but with a slow but steady increase in dissolving pulp and decline in the “other” pulp category.

Though there is some fluctuation from year-to-year, Northern bleached softwood kraft (NBSK) (60%), semi-mechanical (15%), and dissolving (10% and rising) pulps together account for approximately 85% of Canada’s wood pulp exports. Overall, Canada’s pulp exports (by value) are remarkably stable: since 2001 total exports have varied within a relatively tight window of $6.3-7.3 billion (with the exception of the 2009 recessionary year), and performance in any given year is largely determined by relatively easy to anticipate pricing cycles.

Despite overall stability, there has been some change in the mix of products. Dissolving pulp, in particular, has tripled in value to nearly $800 million in annual exports in recent years. Rising global demand has been outstripped by investments in additional supply, which is expected to lead to incremental increases in export volumes at stagnant to slightly declining prices—resulting in an overall stable export value for the next three years, until growth returns in the latter half of the decade. Other grades, largely composed of various mechanical and hardwood kraft pulps, have been in steady decline for the past 10 years—which in value terms has been offset by the growth in dissolving pulp.

For NBSK pulp, stable growth in household and sanitary papers, packaging and textiles has been able to offset a significant share of the impact of declining demand in North America for printing and writing papers. Rising demand for rayon has boosted demand for dissolving pulp. As a result, this trend of overall stability, commodity price cycles and slow displacement of hardwood kraft and mechanical grades in Canada’s export mix by dissolving pulp is expected to continue into the foreseeable future.