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European Hardwood Pulp Producers Have World’s Highest Fiber Costs

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Hardwood pulp manufacturers in Europe have some of the highest wood fiber costs in the world despite prices for hardwood pulp logs having trended downward in most key markets on the continent over the past six years. In the second half of 2017, this trend reversed, with fiber prices going up in both the local currencies and in U.S. dollar terms. In the 4Q/17, prices for hardwood logs in Spain and Finland were the highest on the continent, while French and Swedish prices were on the lower end of the hardwood cost spectrum, according to the Wood Resource Quarterly (WRQ), Seattle, Wash., USA. 

Hardwood fiber supply in Sweden tightened in late 2017 because of an unusually wet and mild early winter season. The tight supply resulted in odd importations of Eucalyptus chips from both Brazil and Uruguay in late 2017 and early 2018 at prices reported to be substantially higher than those for domestically sourced wood fiber. The limited availability of logs resulted in higher prices for hardwood pulp logs during most of 2017 (after being at an 11-year low in the 4Q/16). Despite the recent price rise in the 4Q/17, birch pulp log costs were about 15% lower than their 10-year average (in U.S. dollar terms).

Prices for softwood chips and pulp logs were also up in Sweden during 2017 because of an imbalance between domestic supply and demand. The higher domestic fiber prices resulted in an increase in importation of softwood chips to Sweden in 2017, which reached almost double the volume imported five years ago. In the last quarter of the year, imports reached the second highest quarterly volume on record. 

Historically, most imported chips have been destined for the country's pulp mills, but during the past two years there has been an increase in imported chips to be used for energy. Latvia, Norway, Estonia, and Finland, in ranking order, are the major suppliers of softwood chips, accounting for 95% of the total import volume in 2017. With a higher percentage of lower-cost energy chips during the past few years (predominantly from Norway), the average value for imported chips has declined by about 40% 2013 to 2017, according to the WRQ in its 4Q/17 issue. Of the four major supplying countries, Finland supplied the highest cost chips, while Norway was the lowest cost supplier in 2017. 

More about WRQ is available online. 

 

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