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Rubber and Wood February 10, 2016 12:30:19 PM

New Brunswick’s forestry royalty revenues to drop sharply

Carolina Curiel
ScrapMonster Author
According to Natural Resources Minister Denis Landry, mills are expected to log less during the year. As a result, government revenue from forestry sector is likely to drop.

New Brunswick’s forestry royalty revenues to drop sharply

MIRAMICHI (Scrap Monster): The weakness in buying activity is likely to lead to wood surplus in saw mills across New Brunswick. The rising wood surplus situation is feared to result in huge drop in forestry royalty revenues for the province.

According to Natural Resources Minister Denis Landry, mills are expected to log less during the year. As a result, government revenue from forestry sector is likely to drop. Sawmills in the province have reported huge stock levels of cut boards, on account of poor demand. The log inventory levels too remain high. The slow market conditions prevent the saw mills from cutting logs.

Based on last year’s initial budget projection, royalty revenues for the province are likely to drop by $19 million during the next year, according to opposition parties. If budget final figure is taken as the base, the projected drop in royalty revenues comes to around $11 million, stated the provincial government.

The weak Canadian dollar and rebounding US housing market are supposed to boost lumber exports from New Brunswick. However, domestic market situation in the US west coast has impacted exports of lumber to that region. The wood exports from the US west coast to China have dropped sharply on account of falling Chinese demand. This has led to flooding of the US west coast region with domestic products, giving no room for exports from New Brunswick.

Meantime, the Minister expressed hope that market conditions would improve going forward. The positive US construction permit forecasts implies more wood supplies into the region during 2016-’17, which is a positive for the New Brunswick lumber export industry.

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