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The demand for British Columbia kraft pulp Suderman, Henry Leonard

Abstract

The major objective of this study was to determine the outlook of the British Columbia kraft pulp industry for the period 1969 - 1974. To attain this objective and develop the necessary perspective, the global economy and particularly world trade developments were studied. An historical analysis of world economic variables was made and then, where possible, projections into the future made. From these studies, specific applications to the British Columbia industry were given. Consequently, the approach of this study was to begin with general global considerations and then proceed to more specific items pertaining to the British Columbia industry. The global demand trends for kraft pulp were obtained by studying the major kraft pulp consuming areas individually. Other kraft pulp producing areas of the world were analyzed to see what portion of potential demand they would be able to supply on competitive terms with British Columbia. As the perspective of the study narrowed, it focused on Canada. This country's historic economic and future potential were analyzed in detail. Recent rapid growth trends were noted and their expansionary effect on British Columbia's economy noted. This study revealed that previous forecasters generally understated future economic growth, particularly in the area of world trade. Consequently, a more liberal attitude was adopted in this analysis. On the basis of future reductions in tariffs, particularly the Kennedy Round cuts in the projection period, the mood of this forecast is one of optimism. Buoyant economic conditions are projected based on premises that state no abrupt changes in world affairs should be expected in the next five years. Global kraft pulp demand is expected to grow at least at the same rate as the world GNP growth. The growth rate in economic output has not been too much alike for all countries and consequently the average global GNP growth has given only a rough indication of kraft pulp consumption. Disproportionate GNP growth in the countries is forecast for the next five years. The industrialized countries will continue to grow faster than the less-developed countries. Most of the growth in kraft pulp demand will occur in the industrialized countries, of which the most promising areas are in Europe and Japan. Because the traditional sources for European markets are approaching their raw material limits, substitution from abroad should occur, consequently the demand for British Columbia kraft pulp should increase at a faster rate than overall global demand. The overall growth rate for British Columbia kraft pulp is expected to continue close to its historic average annual rate of 16%. The growth in British Columbia however has characteristically run in cycles and the secondary trend has been accentuated by industry moods of optimism and pessimism. In the last two years pessimism resulting from over-supply has tempered the overall general growth and a trough in the cyclical pattern is forecast for 1970 or 1971. The market is currently firming; consequently construction and expansion of mills is expected to accelerate and a peak in capacity growth should occur in the latter portion of the five-year projection period.

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