Wood Costs for Brazilian Pulp Mills Fell 22% in 2012 on Currency Valuations
Pulp mills and sawmills in Brazil became more competitive in 2012, because the costs for
the wood raw-material, which accounts for about 70 percent of the production costs,
have declined by over 20 percent since 2011.
Nov. 6, 2012 - Pulp mills and sawmills in Brazil became more competitive in 2012
mostly thanks to a weakening Brazilian Real. Pine sawlog prices in Brazil, in US dollar
terms, fell 22 percent in just one year, and prices in the 2Q/12 have been at a level below
where they were just before the financial crisis that hit in 2008, according to the Wood
Resource Quarterly (WRQ).
In the local currency on the other hand, prices have actually increased steadily and in the
2Q/12 were at their highest levels in over four years. Domestic demand for wood
products has been a key driver for the higher log costs. In 2010 and 2011, the local
lumber market was strong because of major investments in the housing construction
sector in Brazil. This market slowed in 2012, and instead, lumber and plywood exports
have slowly picked up steam as those sectors have benefited from the weakening
Brazilian Real and the Brazilian forest industry became more competitive in the
With the Real expected to continue to stay weak against the US dollar, market
participants are hoping for increased exports of lumber, plywood and value-added
products in the coming months. If this scenario actually comes to fruition, demand for
sawlogs may go up and log prices will likely move up in both Real and dollar terms.
Although Brazilian pulplog prices have not changed much in the local currency, they
have fallen dramatically in US dollar terms as the Real weakened this past year.
Eucalyptus pulplog prices in the 2Q/12 were down 28 percent from the same quarter in
2011, while pine pulplog prices declined 26 percent from a year ago, according to the WRQ.
The recent dramatic price reductions of pulpwood have had the result that the wood costs
for Brazilian pulpmill now are among the lowest of all regions tracked by the WRQ, as
compared to a year ago when wood fiber costs in Brazil were above the Global Wood
Fiber Price Indices (SFPI and HFPI). Since wood fiber costs accounted for about 70
percent of the production costs for pulp mills in Brazil in the 2Q/12, the substantial
reduction in pulpwood prices has made the country’s pulp mills more competitive in
2012 relative to other pulp producers around the world.
Wood Resources International LLC publishes the Wood Resource Quarterly report, which tracks
world. For further information visit: www.woodprices.com
SOURCE: Wood Resources International LLC