Canfor enjoys strong pulp results

It was a banner year for Canfor's pulp operations.

With strong prices and healthy market penetration helping the bottom line, one of Prince George's most important industries got to smile at the end of 2013.

Canfor's pulp division president Brett Robinson said the Prince George Pulp Mill location "broke production records" last year, thanks to a new precipitator installed there and excellent staff performance at the plant. That investment also helped airshed residents breathe easier by "substantially reducing particulate emissions while increasing power production capacity."

In addition to being a leading producer of Northern Bleached Softwood Kraft (NBSK) for the world market at Canfor's trio of manufacturing plants in Prince George, the facilities also have power generation capabilities, making them, said Robinson, "North America's largest bioenergy producer."

He said more than $300 million had been spent by Canfor in the past 36 months on major new equipment within their pulp and paper operations, such as two turbo-generators at the Northwood site.

"The equipment is performing better than we expected," he said. A more energy-efficient and production-smooth pulp mill means a better product gets built and more of it gets made. That has been the case in Prince George.

Despite weather-related transportation problems affecting rail cargo logistics and the truckers' strike at the Port of Vancouver, the company still had strong financial returns this year. Canfor's CEO Don Kayne said the company's pulp operations still managed to ship four per cent more in 2013 than in 2012, and the pulp group closed the year with net income of $42 million compared to a mere $13 million the year before.

"Global softwood pulp markets improved steadily through 2013 driven by improving demand from our traditional markets, specifically Europe and North America, while demand from China was relatively even year-over-year," said Kayne.

Robinson said analysts have been predicting softer commodity prices in the next couple of years, but he thinks the Prince George pulp houses will be largely immune to that pain.

"We like to point out that the world's NBSK sector is producing at capacity, there are not a lot of reserves being held anywhere, no one is building a new NBSK plant anytime soon, and market demand for that premium product continues to grow - and we produce it really well," he said.

He also pointed to trends in the recycled paper market that stand to benefit Canfor's pulp division in the long term. Studies are showing that paper made from recycled fibre "is declining in strength as the molecular condition of the recycled product is weakening," he said.

The overall pulp and paper industry will be looking to refresh the supply with younger products being fed into the manufacturing system of recycled paper.