Wood Fiber Costs Reach Two-year Low
Aug. 13, 2009 - Wood cost is the factor that often determines the
competitiveness of a pulp manufacturing plant. This cost typically varies between 40-
65% of the total cash cost depending on product grade and the costs of other components
such as chemicals, energy and laboor, notes Wood Resource Quarterly (WRQ).
In the 1Q/09, the worldwide average cost of wood as a percentage of total manufacturing
cost was 53%, according to Fisher Internationalís database. This database includes
information about cost and equipment information for over 640 wood pulp-producing
facilities worldwide (both market and integrated pulp manufacturers).
The countries with
the lowest wood cost component (as a percentage of total manufacturing cost) were New
Zealand, Russia and Western Canada. Japan, China and Finland had the highest wood
cost percentages (historical trends for each country can be found in the current issue of the WRQ).
Fisher International also ranks every pulp millís competitiveness using a Viability Index
which indicates a plantís risk of closure. This Index is based on the status of individual
plantís capital requirements, production costs, size and technical age. In the 1Q/09, pulp
mills in Indonesia and Chile were ranked with the lowest risk of closures while Japan,
Spain and France were regions with the least competitive pulp plants.
A further analysis of the data behind the Viability Index shows that even in low-risk
countries, individual plants were in the high-risk category. For example in Australia and
Germany, 29% and 14% of the mills, respectively, fell within this category in the 1Q/09.
Japan stands out with 2/3 of the countryís pulp-producing plants being classified as highrisk
The average wood fiber costs for pulp manufacturers worldwide has fallen by about 15%
the past 12 months, WRQ reported. The Global Conifer
Wood Fiber Index (GCFI) was at US$90.01/odmt and the Global Non-Conifer Wood
Fiber Index (GNCFI) was US$94.92/odmt in the 2Q/09. The biggest price decline for
conifer fiber occurred in Finland, Germany and Russia, while non-conifer wood costs
have fallen the most in France, Japan, Germany and Finland, WRQ said.
It is expected that wood
fiber costs have bottom-out in many markets and that they will start increasing later in the
2009, WRQ concluded.
SOURCE: Wood Resource Quarterly