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Higher pulplog, wood chip prices in Q3 19 for Western Canada: WRQ

Wood raw-material costs were down for pulp manufacturers in most regions around the world in the third quarter of 2019 compared to both the previous quarter and Q3 2018.

Prices for softwood pulplogs and wood chips were down between one and 15 per cent quarter-over-quarter, depending on region, with the biggest price reductions occurring in Germany, France, Sweden and the U.S. Northwest.
The only region with higher prices in Q3 2019 was Western Canada, where pulplog prices increased by 10 per cent quarter-over-quarter.

The Softwood Fiber Price Index (SFPI) fell by 2.2 per cent quarter-over-quarter to $89.26/odmt in Q3 2019, the lowest level in two years, and slightly below its five-year average.

In Germany, softwood pulplog prices have experienced a dramatic decline the past year because of an oversupply of low-grade logs from harvests of insect and storm-damaged forests. The average price for contracted logs was at the lowest point since the WRQ started tracking prices in 1988.

Some spot prices were as low as $10-15/m3 in regions where landowners were desperate to move damaged trees from their lands. With the sharp decline in softwood pulplogs prices in Germany, the country currently has some of the world’s lowest pulplog prices.

The Hardwood Fiber Price Index (HFPI) has been fairly stable at around $90/odmt the past year. In Q3 ’19, the HFPI fell slightly from the previous quarter but was about one per cent higher than in Q3 ’18. There were very small price changes quarter-over-quarter for hardwood fibre in the 15 regions tracked by the WRQ.

Of the major hardwood consuming regions in the world, pulp mills in Russia (+13 per cent), China (+eight per cent), U.S. South (+eight per cent), Germany (-10 per cent) and Indonesia (-eight per cent) have seen the biggest changes in wood fibre costs the past year.

With uncertainty surrounding when market pulp prices will rebound, how fast the imbalance in fibre demand and supply in Europe will be corrected, and when the trade negotiations between the U.S. and China will be settled, forecasting of wood fibre prices will remain challenging in 2020.

This is an excerpt from Wood Resource Quarterly (WRQ). This 56-page report, established in 1988 and with subscribers in over 30 countries, tracks prices for sawlog, pulpwood, lumber & pellets worldwide. The WRQ also reports on trade and wood market developments in most key regions around the world. To read the full report, visit www.woodprices.com.