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Hardwood Chip Prices at Record Low, Softwood Prices Highest in Seven Months

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Global trade of hardwood chips have trended upward for six years and totaled almost 24 million tons in 2015. By far, the two largest wood chip-importing markets are Japan and China, both countries with limited forest resources to supply the pulp industry with sufficient wood fiber. 
 
The general price trend for hardwood chips traded overseas has been downward since late 2011 when the FOEX price index (PIX-HCG) reached a record high of almost $207/odmt. In May of this year, this Index was $167.29, representing a 19.1% decline in 4.5 years. Some of the biggest price declines during the past 12 months have been for hardwood chips shipped from Australia to China, from South Africa to Japan, and from Uruguay to Portugal.
 
The FOEX softwood chip price index (PIX-SCG) has also fallen from a peak almost five years ago, but the price decline has been less dramatic than that of hardwood chips. During 2016, the SCG index has actually increased to reach $165.55/odmt in May, which was the highest level in seven months. The major price increase so far this year has been for softwood chips exported from the U.S. to Turkey. A majority of global softwood chip trade is in Europe, as opposed to the hardwood chip trade, which is concentrated to Asia.
 
FOEX and Wood Resources International (WRI), Seattle, Wash., USA, have cooperatively launched two wood chip price indices, the Softwood Chip Global (SCG) and Hardwood Chip Global (HCG), both part of the PIX index family of FOEX. The Indices represent prices (CIF) for wood chips that are traded globally overseas for the manufacturing of wood pulp and wood-based panels. The Indices are reported monthly on the third Tuesday of the month on the FOEX web site.
 
FOEX Indexes Ltd is a private, independent company which specializes in providing audited, trade-mark registered price indices for pulp, paper, recovered paper, biomass and wood chips. Financial institutions use the FOEX Indices as benchmarks when setting prices for SWAP-deals and other financial instruments hedging against product price risks.

 

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