1. Justification for an increase in the price of logs 20 mars 2014 Par Vincent Miville, ing.f, M.Sc.

2. What is ? Promoting the interests of 36 000 wood producers and 130 000 forest producers Representing 13 offices (unions) and wood marketing boards across the province Protection and enhancement of private forests Organized marketing and sale of 6,5 M m³ of wood per year (4,05 M m³ in 2013) 2

3. What is ? 3

4. Presentation Argumentaire4 Increase in the price of roundwood* Improved export conditions Growing demand for Canadian wood products Production capacity under control *logs

5. Improved export conditions An exchange rate that favors exports A less restrictive Softwood Lumber Agreement Free trade agreements offering new perspectives Improved export conditions5

6. An exchange rate that favors exports Improved export conditions6 Source : Canadian Forex

7. An exchange rate that favors exports Improved export conditions7 Impact of a 10% depreciation of Canadian dollar on the profit margin of the forest industry Profit margin before Impact of a 10 % depreciation Profit margin after Wood products 7,0 %+ 2,0 %9,0 % Sawmills + 3,1 % Wood panel mills + 2,4 % Pulp and paper - 0,7 %+ 3,9 %3,2 % Pulp, paper and cardboard + 5,4 % Source : Banque Nationale

8. An exchange rate that favors exports The depreciation of the Canadian dollar will promote the balance sheet of the Canadian forest industry by significantly improving its competitiveness for forest products sold abroad. This devaluation also reduces the competition of roundwood imported from the United States. Improved export conditions8

9. A less restrictive Softwood Lumber Agreement Improved export conditions9 Sources : Random Lengths et Agence du revenu du Canada

10. Free trade agreements offering new perspectives Improved export conditions10 European union Comprehensive economic and trade agreement India Agreement to export Canadian eastern-spruce products to India South Korea Canada-Korea free trade agreement Sources : Affaires étrangères, Commerce et Développement Canada

11. Growing demand for Canadian forest products Residential construction and repair and remodeling are growing in the United States Chinese demand is growing Strong demand for softwood lumber Strong demand for wood panels Growing demand11

12. Residential construction is growing in the United States Growing demand12 Sources : US Census Bureau et Banque TD

13. Repair and remodeling is growing in the United States Growing demand13 Repair and remodeling in the US in 2014 150 G$ US - + 15,1 % y/y Source : US Forest Service

14. Chinese demand is growing Growing demand14 Sources : Ressources naturelles Canada et RISI

15. Chinese demand is growing Growing demand15 Value of Quebec’s exportation of wood products Source : Ressources naturelles Canada

16. Strong demand for softwood lumber Growing demand16 Source : RBC

17. Strong demand for wood panels Growing demand17 Source : RBC

18. Production capacity under control when compared to demand Production capacity of sawmills and wood panel mills under control and prices expected to grow Price of hardwood lumber expected to grow Accumulation of wood chips from sawmills Sustained demand for kraft pulp Stable newsprint prices, but closures are expected Printing and writing papers under pressure What is the future for dissolving pulp? Production capacity under control18

19. Sawmills production capacity under control Production capacity under control19 Source : RBC

20. Sawmills production capacity under control Production capacity under control20 Source : RISI

21. … and prices expected to grow! Production capacity under control21 Sources : Pribec, Random Lengths and consensus (CIBC, BMO, RBC, TD, Banque Scotia, RISI)

22. Wood panel mills production capacity under control Production capacity under control22 Source : RBC

23. … and interesting prices! Production capacity under control23 Source : Random Lengths et RBC

24. Price of hardwood lumber expected to grow Production capacity under control24 Hardwood lumber mills in Quebec 2000 : 226 2005 : 132 2012 : 37 Sources : Random Lengths et MRN

25. Accumulation of wood chips from sawmills Production capacity under control25 Sources : IWR et Statistiques Canada

26. Sustained demand for kraft pulp Production capacity under control26 Sources : RISI et RBC

27. Stable newsprint prices, but closures are expected Production capacity under control27 Sources : FAOSTAT, RISI et BMO

28. Printing and writing papers under pressure Production capacity under control28 Sources : RISI et KSH

29. What is the future for dissolving pulp? Production capacity under control29 Accusation of dumping from China Fortress paper : 13% tax eliminating competitiveness Thurso mill was never profitable Dissolving pulp or NBHK pulp? Sources : RISI, RBC, Tembec, Fortress et MOFCOM

30. Impacts on wood producers 30 Products Price pressure Softwood pulpwood ↘ Hardwood pulpwood ↔ Softwood timber ↗ Hardwood timber ↗

31. www.foretprivee.ca 31

32. 13 offices across the province 32