Sluggish Pulp Markets Pushed Down Prices Worldwide for Wood Chips and Pulplogs
Wood fiber costs, which can account for up to 70 percent of the production costs for a
pulpmill, fell in many markets during the 1Q/12, according to the Wood Resource
Quarterly. The biggest declines were seen in Western Canada, Europe and Brazil, while
Chile, Australia and New Zealand experienced some minor price increases for pulplogs
and chips during the quarter.
July 2, 2012 - The global pulp market is mired in uncertainty — uncertainty when China
will move into buying mode, uncertainty about where the European economy is heading
and uncertainty if low spot prices for softwood market pulp will push pulp mills in
Europe and North America to take market-related downtime — according to Wood Resources International (WRI).
In this environment, pulp mills are trying to squeeze their costs to remain competitive and
to be able to run at full capacity. Because wood fiber costs currently account for between
52-71 percent of the total production costs depending on region of the world (source:
Fisher International), the primary focus in the cost-cutting has been on reducing the price
they pay for wood chip and pulpwood prices over the past six months, WRI said.
This has created the situation in which many fiber suppliers have been forced to accept
lower prices for their fiber. As a consequence, wood fiber prices fell throughout the world
in the 1Q/12, which caused the two global
wood fiber price indices to decline to their lowest levels in over a year.
WRI's Wood Resource Quarterly report shows the Hardwood
Wood Fiber Price Index (HFPI) experienced the biggest decline, falling by 3.5 percent
from the 4Q/11 to US$109.67/odmt. Since its all-time high last fall, the HFPI has come
down seven percent in just two quarters. Wood costs were down the most in Europe and
Japan. The price premium for hardwood fiber over softwood fiber is currently the lowest
In addition, the Softwood Wood Fiber Price Index (SFPI) fell a more modest 0.4 percent from the
previous quarter, which was four percent lower than in the spring of 2011. Softwood fiber
price trends were mixed, with increases in Oceania, Chile and the US South and falling
prices in Europe, Western Canada and Japan.
Softwood chip prices in British Columbia fell 25 percent from the previous quarter,
according to WRI's North American Wood Fiber Review, and are currently 18 percent lower
than last fall when prices were at a 16-year high.
In Europe, softwood pulplogs prices fell
between one and six percent in the local currencies in the 1Q/12 as compared to the
previous quarter, are now back down to price levels last seen in 2010.
With continued soft pulp and paper markets during the second quarter, wood fiber costs
are likely to continue to weaken in many key markets around the world in the coming
months, WRI concluded.
SOURCE: Wood Resources International