Canada’s Paper Products Industry: Industrial Outlook Autumn 2005

Pulp and paper producers continue to struggle, due to a combination of surging energy prices, weak demand for key products such as newsprint, and the strong Canadian dollar. Therefore, profits in the paper products sector will remain thin, rising moderately from $63.9 million in 2004 to $88.7 million this year.

Next year, profits will rise to $485.8 million because of modest gains in prices and production.

Over the medium term, the sector will still face several challenges to profitability, including a limited ability to raise prices, very little growth in demand for key products such as newsprint, and rising import penetration. Nevertheless, industry restructuring to improve the mix of paper grades produced and the cost structure will allow profits to rise gradually.