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Fiber Prices Decline with Weaker Lumber Demand, Stronger U.S. Dollar

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With weaker demand for lumber around the world, sawlog prices fell in a majority of the 21 markets tracked by the Wood Resource Quarterly (WRQ), Seattle, Wash., USA. The Global Conifer Sawlog Price Index (GSPI) declined in the third quarter for the first time since the first quarter of 2009, to $90.18/cubic meter. With a few exceptions, prices fell in both local currencies and in U.S. dollar terms. The only region that saw any substantial price increase in the third quarter was British Columbia, where prices were up 5% - 7% from the second quarter. This region has benefited from higher lumber exports and production has increased during 2011, according to WRQ.

Pulpwood Prices
A strengthening of the U.S. dollar against many currencies resulted in lower wood fiber costs in U.S. dollar terms for the pulp industry in the third quarter, according to WRQ. As a result, its Softwood Wood Fiber Price Index (SFPI) fell by less than 1% to $108.90/ovendry metric ton (odmt), which was the first decline since the second quarter of 2010. In addition to the exchange rate adjustments, prices also fell in the local currencies in Russia, France, and Spain, WRQ notes.

The Hardwood Wood Fiber Price Index (HFPI) rose for the fifth quarter in a row, reaching $117.91/odmt, an increase of 14% since early last year. The biggest increases from the second quarter occurred in Chile, Japan, Indonesia, and Brazil. A premium of $9.01/odmt for the HFPI over the SFPI has never been higher than in the third quarter.

Pulp Markets
The global demand for market pulp has been weakening the past four months, particularly for hardwood pulp. Pulpwatch reports that global shipments of bleached hardwood kraft pulp (BHKP) fell from 1.76 million metric tons in June to 1.41 million metric tons in July. Although shipments picked up in August and September, the outlook for the next six months is for lower demand and reduced pulp production compared with the same period one year ago.

The softwood market pulp NBSK (northern bleached softwood kraft) price has fallen from its record high in June earlier this year. In just four months, the price has come down almost $100/metric ton to $930/metric ton as of early November, according to FOEX.

Lumber Markets
Although there is limited production data available for the full third quarter, there are early reports indicating lower production levels in the U.S., Eastern Canada, the Nordic countries, Russia, and a number of countries in Europe. In addition, a number of the largest lumber-consuming countries in the world imported less lumber in July and August than they did in the previous months. Some of these countries included the U.S., the U.K., and Germany. Even the fast increase in imports to China seen earlier in the year slowed down during the fall.

In British Columbia, sawmills have been running at an 83% utilization rate thanks to continued strong exports to Asia. Production during the first eight months reached 8.2 million cubic meters, which was 7.2% higher than the same period in 2010. Softwood lumber imports to Japan are up 9% so far this year. Total imports for the year may reach around 6.8 million cubic meters, the highest import volumes since 2007.

Biomass Markets
Prices for woody biomass, whether sawmill byproducts, forest residues, or urban wood waste, were lower in 2011 than the previous two years in most regions throughout the U.S., reports the North American Wood Fiber Review. The expansion of pellet capacity in Europe over the past five years has been much faster than demand. Pellet prices in Sweden fell for the first time in almost three years. In Germany and Austria, pellet prices only changed a few euros. The price discrepancy between the three largest markets in Europe is currently the widest it has been since 2007.

More information is available online.


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