Wood Costs Fall for European Pulp Mills as Markets Continue to Weaken
 Print this article | Send to Colleague
Wood costs for many European pulp mills have fallen during the past six months as the pulp market has weakened, according to the Wood Resources Quarterly (WRQ), Seattle, Wash., USA. In the Nordic countries, pulp log and wood chip prices have fallen 11%-15% from last spring. Despite the price decline, Europe continues to have some of the highest wood fiber costs in the world, WRQ notes.
Wood fiber costs for pulp mills fell in practically all major markets of Europe in the 1Q/12 because of weaker pulp markets in late 2011 and early 2012, WRQ reports. Last year, wood costs in many countries on the continent, including Sweden, Norway, France, Austria, Germany, and Spain, reached record highs, but in all of those markets, prices for pulp log and wood chips are now substantially lower, WRQ emphasizes.
The financial instability in many economies in Europe is contributing to the increased uncertainty about the near future demand for pulp and paper on the continent and weakening pulp markets, so many pulp mills are trying to cut production costs to stay profitable. Wood fiber costs have fallen more than other cost (energy, labor, and chemicals) the past six months. Nevertheless, wood costs are still by far the highest cost component when manufacturing pulp, ranging between 55% and 70% of total production costs for the major producers in Europe, according to Fisher International.
Because of the weaker pulp markets, many pulp mills in France and Germany reduced operating rates, resulting in lower demand for pulp logs last winter, WRQ says. This not only interrupted the almost two-year trend of price increases, but actually contributed to a fall in prices, back to levels previously seen last summer, it adds. With the euro weakening against the U.S. dollar, wood prices in dollar terms have declined even more dramatically than in the local currency.
In Northern Europe, pulp log prices have fallen between 11% and 15% from last spring, depending on country and species. It has been difficult to be a forest owner in Sweden the past year, as prices have declined for both saw logs and pulp logs. In parts of Sweden, it is not likely that pulp log prices will decline much further as they are now reaching the same levels as those for energy logs, WRQ points out.
Eucalyptus log prices in Spain have been on a steady decline for almost a year and the major fiber consumers have lowered the price they pay to landowners practically every month so far this year, according to WRQ. In U.S. dollar terms, the average cost for eucalyptus logs has declined by 21% since its all-time-high in the 2Q/11, WRQ reports.
Despite the recent decline in pulpwood and wood chip price, pulp mills in Europe still have higher wood costs than many of their competitors around the world, WRQ concludes.
|
|
