Industry News Markets
Wood fiber costs down in second quarter

The greatest declines were seen in Brazil, Australia, Russia, Spain and the U.S. northwest, and Eastern Canada. Prices for wood chips and pulplogs in both local currencies and in U.S. dollars fell in most of the 17 regions tracked by the Wood Resource Quarterly.

Uncertainty in demand for pulp, lower pulp and paper prices, reduced market pulp production and a healthy supply of sawmill residuals were all factors that put downward pressure on wood fiber prices this spring and early summer. The Softwood Wood Fiber Price Index (SFPI) fell by 4.1 percent from the first quarter of this year to $100.54 per oven-dry ton (odmt). This was the biggest quarter-to-quarter drop since 2008. The biggest price declines for hardwood fiber from the first quarter of 2012 to the second quarter occurred in Brazil, the U.S. Northwest, Australia and Eastern Canada.

Hardwood fiber prices have fallen even more than softwood fiber prices this year. The Hardwood Wood Fiber Price Index (HFPI) was down 4.4 percent to $104.88/odmt from the previous quarter. The HFPI has now fallen for three consecutive quarters since the all-time high in the third quarter of 2011, and in the second quarter of 2012 was at the lowest level in two years. The largest price reductions from the first quarter of 2012 occurred in Brazil, Russia and Australia.

Although Brazilian pulplog prices have not changed much in the local currency, they have fallen dramatically in U.S. dollar terms as the Real has weakened the past year.

Eucalyptus pulplog prices in the second quarter of 2012 were down 28 percent from the same quarter in 2011, while pine pulplog prices declined 26 percent from a year ago. The recent dramatic price reductions of pulplogs have resulted in Brazilian pulpmills enjoying among the lowest wood costs of all regions tracked by the WRQ, despite being above the global average as recent as 12 months ago.

Wood fiber costs were also down throughout Europe in the second quarter, with the smallest declines (in U.S. dollars) in Finland (-1.3%) and Norway (-3.6%) and the biggest reductions in Spain (-15%) and France (-7.7%). In most markets, wood fiber prices have come back down to where they were in 2010.

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.