Selective Cuttings

Wood product export recovery well underway

June 10, 2013

Canada’s primary wood product exports have been steadily recovering since 2009, a recovery which has recently started to accelerate.

Canada’s primary wood product export trends (1995-2012)

This graph shows the value of Canada’s primary wood product exports for the 1995-2012 period, including softwood lumber, panels, raw logs and other products. The value of each product declined rapidly after 2004, but hit bottom in 2009 and have been recovering since then.

Softwood lumber (68%), panels (23%), and raw logs (4%) on average account for just over 95%, by value, of Canada’s primary wood product exports. Exports of each were devastated by the bursting of the U.S. housing bubble, but began to recover in 2010, due in large part to increased exports to China. In recent months, a recovering U.S. construction sector has increased production and prices: over the first two months of 2013 (not shown), Canada’s total softwood lumber exports have increased by 35%, panels by 52%, and logs by 24% relative to the first two months of 2012.

If the volume of lumber and panel exports increase by 15% in each of the next two years, and if lumber and panel prices remain at current levels (about 35% higher than 2012), then the value of Canadian primary wood product exports will have surpassed $14.5 billion by the end of 2014. These assumptions are not necessarily stretch assumptions: volumes of lumber and panels are rapidly increasing as the recovery in U.S. housing continues, and while prices are expected to fluctuate over the short-term, the outlook over the next 5 years is certainly for prices to continue to rise. Which is to say, it is not unreasonable to think that within two years the export value of Canadian primary wood products will have recovered to pre-2006 (pre-recession, pre-U.S. housing crisis) levels, and that they will almost certainly reach those levels by the end of 2015.