Industry Watches for Impact of Japan Quake

“The earthquake and tsunami that ravaged northeast Japan could put near-term pressure on Canada’s forest-products sector, threatening to dry up new orders while Japan copes with the immediate aftermath of the disaster.

Dundee Capital Markets analyst Richard Kelertas said he doesn’t expect any export disruption to last long, as he believes Japan will look to rebuild quickly and stockpile product before prices soar. In the interim, Canadian firms may look to divert exports that had been earmarked for Japan to China, assuming product specifications, such as sizing and wrapping, are closely matched, he said.

Wood will be a major construction material in the residential rebuilding of Japan, Mr. Kelertas said, as its elasticity makes it more earthquake resistant than concrete. Indeed, he said this trend was already in evidence before this week’s devastating quake. To give a benchmark of the possible scale of the rebuilding effort, Mr. Kelertas noted that the Chinese government has spent about one trillion yuan (about $152 billion) since a magnitude-7.9 quake struck Sichuan province in May 2008. He said he expects the damage wrought by the Japan quake to be of similar if not higher magnitude.”

The Wall Street Journal