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N.A. Wood Fiber Prices Continue Downward Trend

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North American wood fiber prices have trended downward for most of 2015 and 2016 with prices in the 3Q/16 being at their lowest levels in more than two years, according to the North American Wood Fiber Review (NAWFR), Seattle, Wash., USA.

Prices for wood fiber consumed by the pulp industry in North America have fallen during the past year in all regions of the continent with the exception of the U.S. South, NAWFR reports. The biggest declines have been in the northwestern and northeastern U.S. where prices have fallen between 10% and 15% from the 3Q/15 to the 3Q/16.
In the U.S. Northwest, where a majority of the fiber furnish is sawmill residuals, prices have fallen 11% in one year, but are still higher than the 25-yr. average price. Current price levels for softwood chips in Washington and Oregon are the second highest in North America, behind the Lake States region. The lowest cost regions for chips are the U.S. South, British Columbia, Alberta, and Quebec.
Healthy operating rates at sawmills in the Pacific Northwest and high chip inventories at the region’s pulp mills are major factors behind the recent price declines, and this downward trend is likely to continue into the 4Q/16. The high supply of residual chips has resulted in less demand for costlier roundwood chips, leading to declining pulp log prices. The average prices for Douglas-fir and hemlock log prices were 13% lower in the 3Q/16 compared with the 3Q/15, according to NAWFR.
Chips and pulp log prices in the U.S. South, which have been nearly unchanged for more than a year at levels close to the highest since the 1980s when NAWFR started tracking prices in that region, also showed some modest easing during the fall, but not to the degree seen in other regions in North America.
Canadian wood fiber prices, in U.S. dollar terms, have come down substantially from their record highs in 2012. Pulp mills throughout Canada have become much more competitive over the past few years and have gone from having the highest wood fiber costs in North America five years ago to currently having the lowest costs on the continent.
In British Columbia, wood chip prices would most likely have fallen more than they have the past year had it not been for the commonly used formula linking chip prices to the NBSK (northern bleached softwood kraft) pulp price, a price that has stayed fairly stable during the past year.


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