Report says pine beetle will reduce future lumber

Mar.
19, 2010, Vancouver – The British Columbia Interior’s timber harvest and
sawmill production is expected to see long-awaited downsizing as the effects of
the mountain pine beetle (MPB) infestation on timber supplies take hold,
according to the International Wood Markets Group. The MPB could eventually
kill up to one billion cubic metres of standing lodgepole pine in the British
Columbia Interior. Although a salvage program has been underway for much of the
last ten years, eroding log quality, poorer conversion economics, and shorter
shelf-life of the dead timber will result in a much smaller industry in the
future as a result of sawmill and plywood mill closures.

Depending
on a wide range of market variables and processing assumptions, the British
Columbia Interior may be able to delay the inevitable, but peak sawlog
availability and output is now forecast to occur within three to five years.
One of the middle-term outcomes should be much higher lumber prices for those
mills that survive, as production from other parts of Canada and the United
States will not be enough to meet market demand unless increased prices
stimulate more output. As a result, the reductions in lumber production will
contribute to a possible 50% reduction in Canada’s softwood lumber market share
of U.S. consumption.

Coincident
with the decline in solid wood and panel production will be a significant
reduction in the availability of residual fibre, chips, sawdust, shavings, and
hog fuel, which are currently used to produce pulp, paper, pellets, panel
boards, and electrical energy throughout the British Columbia Interior. These
shortfalls may eventually lead to a decline in the profitability of these
businesses or further plant closures.

On
a brighter note, it is forecast that, in the short term, in excess of 225
million cubic metres of wood biomass, including harvesting waste,
unmerchantable timber, and some standing dead timber, may be available to
support new biomass consuming industries throughout the Interior, if the
economics of fibre recovery can be supported. However, as sawmill closures
occur and the provincial annual allowable cut falls, potential biomass
surpluses will be reduced significantly.

The
full report, published by International Wood Markets Group, is titled B.C.
Interior – Mountain Pine Beetle Attack: Impact & Outlook on B.C. Timber
Availability & Wood Products Production. The report is a result of the
combined efforts of three British Columbia-based consulting firms
and four consultants: Jim Girvan of Management Decision and Technology, Murray
Hall of Murray Hall Consulting, and Gerry Van Leeuwen and Russell Taylor of
International Wood Markets Group.

”As
a result of differing proportions of pine within each region and the degree to
which the MPB has affected the standing timber, the impacts of the epidemic are
very different among the eight British Columbia Interior regions
assessed, with some being impacted significantly, while others have virtually
no impact at all,” says Girvan.

“Residual
wood chips will be surplus to demand in the short-term as sawmills return to
more traditional operating levels,” comments Hall. “However, the surpluses are
very regional in nature. Over the longer term, however, as sawmills close,
residual wood chips will once again be in short supply within the British
Columbia
Interior.” Major shortfalls in sawdust and shavings are also forecast within
the Interior while hog fuel appears to be in balance provincially, but regional
shortfalls and surpluses are significant. Opportunities may exist for wood
pellets and perhaps biofuels in the short term, but the long-term residual byproducts
supply will become heavily taxed by existing users.

Read news coverage by Gordon Hamilton for the Vancouver Sun.