The Economy 1998


Forestry

 

Joel'sWORLD.gif (13083 bytes)NEWSPRINT

Newfoundland newsprint producers posted record shipments last year as the industry continued to focus on cost reduction and modernization to remain internationally competitive and financially sound. Newsprint shipments from the three mills totalled 740,900 tonnes, representing a 3.8 percent gain from 1996. Newsprint from the Province continues to reach the far corners of the world, maintaining the industry’s strong international market base.

Stronger global demand has been the catalyst for a turnaround in newsprint markets. While producers struggled with low prices early in 1997, most were reporting positive earnings in the second half as prices climbed from a low of US$500 per tonne in January to US$590 in December. Firmer markets and prices kept employment levels at Provincial mills stable throughout the year.

Consolidations in the national pulp and paper industry continued last year. Approximately six billion dollars or 17 percent of the Canadian industry's assets were involved in acquisitions and divestitures. Efficiencies from last year's merger of Abitibi-Price and Stone-Consolidated are beginning to materialize. The new entity, Abitibi-Consolidated, is the world's largest newsprint producer and this stronger operational structure should be positive for the Company’s mills in Stephenville and Grand Falls. These two mills together operate as the Company’s International Mill Business Unit. Future investment plans at all three local mills will focus on increasing capacity to meet international market demand and improving product quality to increase market penetration and shares.

LUMBER

Production from provincial sawmills has reached record levels in recent years, surpassing 75 million board feet in 1996-97 and is estimated at more than 85 million board feet for 1997-98. Major markets include the southern United States, the United Kingdom and Asia. A focus on value-added products, capital investment (e.g., kilns) and improved technology have allowed local producers to expand capacity, improve profitability and compete more effectively in North American and foreign markets.

FOREST MANAGEMENT

An important issue for forest management is ensuring adequate wood supply for the forest products sector. Current deficiencies have been met through the importation of wood from Quebec, PEI and Labrador. As well, efficiencies in wood usage have increased through the cooperative efforts of lumber producers and newsprint mills. Continued improvement in forest management practices, as described in the most recent Newfoundland Forest Service twenty-year forestry development plan, ensures the expansion efforts of the industry are supported.

OUTLOOK

Newsprint shipments from the Province are expected to rise moderately this year in response to growing international demand. Strong demand should continue to exert upward pressure on newsprint prices, which are expected to be higher on average compared to the previous year. Some producers are proposing a US$50 per tonne increase later this spring, potentially moving the price of newsprint to US$640-645 per tonne. Investment at the three provincial mills should exceed $40 million this year. Major projects for 1998 include a chip receiving facility and machine modernization at the Corner Brook mill, thermo-mechanical pulp upgrades at both Abitibi mills, as well as an investment in the Star Lake hydro-electric project by Abitibi's Grand Falls mill.


Main Page Contents Previous Next