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Wood fibre prices trending down

Nov. 15, 2016 - North American wood fibre prices have trended downward for most of 2015 and 2016 with prices in the 3Q/16 being at their lowest levels in over two years, according to the North American Wood Fibre Review.

Wood fibre costs for pulpmills in Canada and the U.S. have fallen over the past year as a result of higher availability of residual chips from the continent’s sawmills, reports the North American Wood Fibre Review. The biggest price declines have been in the U.S. Northwest and Northeast regions, but prices have also fallen quite dramatically throughout Canada.

Seattle, USA. Prices for wood fibre consumed by the pulp industry in North America have fallen over the past year in all regions of the continent with the exception of the U.S. South, reports the North American Wood Fibre Review (NAWFR). The biggest declines have been in the northwestern and northeastern U.S. where prices have fallen between 10-15 per cent from the 3Q/15 to the 3Q/16.

In the U.S. northwest, where a majority of the fibre furnish is sawmills residuals, prices have fallen 11 per cent in one year but are still higher than the 25-year average price. Current price levels for softwood chips in Washington and Oregon are the second highest in North America, behind the Lake States region. The lowest cost regions for chips are the U.S. South, British Columbia, Alberta and Quebec.

Healthy operating rates at the sawmills in the Pacific Northwest and high chip inventories at the region’s pulp mills are the major factors behind the recent price declines, and this downward trend is likely to continue into the 4Q/16. The high supply of residual chips has resulted in less demand for costlier roundwood chips, leading to declining pulp log prices. The average prices for Douglas-fir and hemlock log prices were 13 per cent lower in the 3Q/16 as compared to the 3Q/15, according to the NAWFR (www.woodprices.com)

Chips and pulp logs prices in the U.S. South, which have been nearly unchanged for over a year at levels close to the highest since the 1980s when NAWFR started tracking prices in that region, also showed some modest easing during the fall, but not to the degree seen in other regions in North America.

Canadian wood fibre prices, in US dollar terms, have come down substantially from their record highs in 2012. Pulp mills throughout Canada have become much more competitive over the past few years and have gone from having the highest wood fibre costs in North America five years ago to currently having the lowest costs on the continent.

In British Columbia, wood chip prices would most likely have fallen more than they have the past year had it not been for the commonly used formula linking chip prices to the NBSK pulp price, a price that has stayed fairly stable the past year.

November 15, 2016  By Wood Resources International LLC