Fiber prices lowest since 2010
By Hakan Ekstrom
The declining prices for softwood pulp during much of 2012 have forced many pulp mills to try to cut wood fiber costs to remain profitable. As a consequence, the wood fiber price index (SFPI) has continuously declined the past year and, during the third quarter of 2012 was at its lowest level since 2010, according to the Wood Resource Quarterly.
By Hakan Ekstrom
Prices for softwood market pulp (NBSK) have trended downward for more than a year from their record highs of over $1000 per ton in the summer of 2011. In the third quarter of 2012, prices had fallen to between $750-800/ton in Europe and were about 50 dollars higher in the U.S. This relatively long-lasting price decline seems to have come to an end this fall, as there are now pulp producers negotiating higher prices again. List prices for December are in the range of $820-870/ton depending on if the deliveries are to Europe or North America.
The lower pulp prices have resulted in downward price pressure on wood fiber prices in many high wood cost regions around the world as pulp companies have seen product prices approach production costs. When profit margins for pulp mills are being squeezed, one of the first step taken to improve profitability is often to try to reduce the wood costs, since those costs typically account for 60-70 percent of the production costs when manufacturing pulp.
Prices for pulplogs and wood chips fell in the local currencies in most of the key regions worldwide in the third quarter of 2012. However, because the U.S. dollar weakened against most currencies, wood prices in U.S. dollar terms did not decline as much in the third quarter.
The Softwood Wood Fiber Price Index (SFPI), which is based on US dollars, was down another 0.5 percent from the second quarter of 2012 to US$100.05 per oven-dry metric ton (odmt).
This was the fifth consecutive quarterly decline, and the index has now fallen 8.7 percent since early 2010. The biggest price declines were seen in the Northwestern US, Germany, Spain and Russia.
Hardwood fiber prices started to increase in some regions around the world in the 3Q/12, which resulted in the first increase of the Hardwood Wood Fiber Price Index (HFPI) in over a year, as reported in the WRQ. The Index increased by $1.56/odmt from the second quarter of 2012 to $106.44/odmt in the third quarter. Hardwood fiber prices increased the most in Russia, Eastern Canada and Brazil.
The price outlook for wood prices in the fourth quarter is mixed, with a stabilizing of prices in most softwood pulp-producing countries but also continued price declines in a few regions.
Global pulpwood and timber market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, established in 198 and with subscribers in over 25 countries, tracks sawlog, pulpwood, lumber and pellet prices, trade and market developments in most key regions around the world. Visit: www.woodprices.com.