War in Ukraine | war and profits

War plunges populations into misery and the world economy into chaos. Paradoxically, war also directly and indirectly benefits many companies, and not just those in the arms sector. Examples in Canada and Quebec.

Helene Baril
The Press

Quebec: wood and aluminum

Lumber Price Pressures

Russia: 1^er exporter in Europe

Canada : 1^er exporter in the United States

Wood producers in Quebec and British Columbia do not sell it in Europe, but they could benefit indirectly from the increased tensions caused by the sanctions against Russia, the main producer of the Old Continent. Without Russian wood, other European producers will keep their wood for their market and not export to the United States, which will contribute to maintaining high prices on the North American market, explains Michel Vincent, economist of the Council of the Quebec forest industry.

Quebec and British Columbia are the two provinces that export the most wood to the United States. Producers like Resolute in Quebec and West Fraser Timber in British Columbia will continue to increase their profits due to high prices.

Aluminum production record

Russia: 2^and world producer

Canada: 1^er exporter in the United States

In an already tight aluminum market, Western sanctions against Russia, the world’s second largest producer, continue to put upward pressure on the price of the metal. On the international market, the price of a tonne of aluminum has reached record highs. In Quebec, where 95% of Canadian production is concentrated, aluminum smelters are doing everything possible to increase their production and take advantage of current prices.

The increase in the price of aluminum will fill the coffers of producers, but also of Hydro-Québec, whose contracts with aluminum smelters are linked to the price of the metal.

7.3 billion

Value of Canadian aluminum exports in 2020. The price of the metal has more than doubled since then.

Saskatchewan and Manitoba: grain, fertilizer

Increase in wheat exports

Russia: 1^er global exporter

Ukraine: 6^and global exporter

Canada: 3^and global exporter

Several countries that depend on Russia and Ukraine to feed their people, including Egypt and Lebanon, fear the spike in prices and shortages that will result from the war in Ukraine. Canadian wheat farmers are gearing up to increase production to meet increased global demand.

According to the President and CEO of the St. Lawrence Seaway Management Corporation, Terence Bowles, Canadian exports could be called upon to fill these shortages. “I don’t like to say it’s going to help us because it makes it look like we’re taking advantage of other people’s problems. But I would say Canada is in a good position to be able to help replace a lot of the grain that won’t be available,” he said at the March 24 opening of the seaway.

In the land of potash

Russia and Belarus: 2^and and 3^and global producers

Canada: 1^er world producer

The world’s largest producer of fertilizer, Nutrien, is Canadian, and it is already benefiting from the sharp increase in prices linked to the sanctions affecting imports from Russia and Belarus. The company has the raw material (potash) and energy (natural gas) to replace Russian production and further increase its share of the world market.

Alberta: oil and gas

Full of profit

Russia: 3^and world producer

Canada: 4^and world producer

The price of oil has soared since Russia invaded Ukraine, to the benefit of Canadian producers, whose average cost of production has remained stable. According to Suncor, Canada’s largest oil producer, Alberta operations are profitable from a price of US$35 a barrel of WTI. The price of benchmark crude flirted in early March with US$130 a barrel.

“Every increase in the price of crude oil of US$1 a barrel represents an increase in revenue of $500 million for the province of Alberta,” estimate economists Warren Lovely and Daren King of the National Bank.