The global forest products industry continues to be plagued by price volatility and fragmentation, a major conference in Vancouver has heard.

PricewaterhouseCoopers’ (PwC) 16th Annual Global Forest and Paper Conference on March 25 reported depressed industry earnings for the second year running. Net profits for the top 100 companies dropped by more than 20% in 2002 to US$5.2bn from US$6.8bn in 2001 due to depressed prices.

Lumber demand in 2002 and the first two quarters of 2003 has remained strong, due largely to a surge in US housing starts, but over-supply has led to average timber prices falling by about 4% for Canadian timber.

Producers in British Columbia have done an “excellent job” reducing their costs to counteract duties imposed on them by the US, putting mills in eastern Canada and southern US out of business.

&#8220The global industry is facing a slow recovery in 2003. It looks as if the rate of demand and pricing will recover somewhat to allow a slight improvement in overall earnings.”

Craig Campbell, PricewaterhouseCooper

Craig Campbell, of PwC, said: “The global industry is facing a slow recovery in 2003. It looks as if the rate of demand and pricing will recover somewhat to allow a slight improvement in overall earnings.”