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Pulp wood prices down 15% in Canada

May 24, 2013, Seattle, Wash. – Both the HFPI and SFPI price indices have fallen by more than 10 per cent since 2011. The biggest declines in wood fibre prices have occurred in Brazil, Canada, the U.S. and Japan.

This trend continued in the first quarter of 2013 when the Hardwood Wood Fiber Price Index (HFPI) fell by 1.1 per cent to $103.66 per oven-dry metric ton (odmt), which was 12 per cent below the all-time high in the third quarter of 2011, the Wood Resource Quarterly reported.

However, the price trends were mixed in the 1Q/13, with hardwood fibre prices lower in Asia and Eastern Canada and slightly higher in Europe and Latin America as compared to the 4Q/12. Eucalyptus pulpwood prices in Brazil have fallen more than in most other regions the past two years, with 1Q/13 prices being down more than 30 per cent since 2011.

This dramatic decline has resulted in Brazilian pulp mills now experiencing the fourth lowest wood fibre costs in the world, behind Russia, the U.S. South and Chile.

The Softwood Wood Fiber Price Index (SFPI) in the 1Q/13 was practically unchanged from the 4Q/12 at $99.90/odmt. The SFPI has inched downward for seven consecutive quarters and is currently down 8.8 per cent from the most recent peak in 2Q/11, according to the WRQ. The biggest changes in the 1Q/13 in U.S. dollar terms were the declines in chip prices in Eastern and Western Canada, Japan, and the U.S. Northwest. The biggest increases occurred in France and Germany.

There has been an increased supply of residual chips from the sawmilling sector that has turned up the production levels over the past six months. This is the major reason for the declining prices in Canada and the U.S.

Prices for wood chips in Canada have fallen more than 15 per cent in just over a year.

With improved markets for softwood lumber in the U.S., it is likely that the availability of lower-cost wood fibre for the pulp industry throughout North America will continue through the rest of 2013 and into 2014.

May 24, 2013  By  Jayson Koblun