Wood Fiber Costs for Hardwood Pulp Mills Decline, Softwood Costs Stable

Reduced pulpwood prices in Sweden, Russia, Brazil, and Australia in the 3Q/14 resulted in the lowest Hardwood Fiber Price Index (HFPI) since 2009, according to the Wood Resource Quarterly (WRQ), Seattle, Wash., USA. With mixed price trends for softwood fiber, the Softwood Fiber Price Index (SFPI) has been fairly stable for the past two years.    

The costs of hardwood fiber for the production of pulp have trended downward for more than three years. The global HFPI, which tracks prices for pulp logs and wood chips in 14 regions around the world, reached its lowest level since 2009 in the 3Q/14 when it fell to $96.76 per oven-dry metric ton (odmt). The biggest declines in prices from the 2Q/14 occurred in Sweden, Russia, Brazil, and Australia, mainly as the result of a stronger U.S. dollar.
The HFPI index all-time high of $117.90/odmt was reached three years ago. The largest consumption of hardwood fiber in the world is in Brazil where the pulp production has been on an upward trend for more than two decades. 
Despite the continued increase in pulp production and the accompanying rise in wood fiber consumption, prices for Eucalyptus logs have not changed much in Brazilian Real terms, according to the WRQ. In U.S. dollar terms, the picture is somewhat different, with prices having fallen as the Brazilian real has depreciated.
The SFPI, which tracks global prices of softwood chips and pulp logs, has been fairly steady over the past two years, fluctuating between $98-100/odmt. The major changes in softwood prices in 2014 occurred in sawmill residuals in the Western U.S. and Western Canada, where prices increased, and in Germany and Brazil, where prices have fallen this year.
In Western Canada, chip prices have gone up mainly because of higher prices for softwood market pulp (NBSK), to which they often are linked, while recent price increases in the Western U.S. have been driven by a rise in the volume of exported chips to Japan.
Although wood raw-material costs for the Russian forest industry have not changed much in ruble terms, the costs in U.S. dollars for pulp logs have fallen dramatically from the 2Q to the 3Q this year because of the weakening Russian currency. Pulpwood prices have come down to levels not seen in more than six years. Currently, both softwood and hardwood pulp log prices are lower in Russia than in any of the 17 other regions covered by the WRQ.

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