July 2010
Over The Wire Tissue Edition
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Brazil Eucalyptus Prices Increase 25% during Past Year in U.S. Dollar Terms

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The supply and demand for Eucalyptus logs in Brazil has been in balance the past year, resulting in stable log prices in the local currency, according to the Wood Resource Quarterly (WRQ), Seattle, Wash., USA. As a result of the strengthening Real, log costs have gone up in U.S. dollar terms and were 25% higher in the 1Q/10 than in early 2009. Five years ago, Brazil had some of the lowest wood fiber costs in the world in U.S. dollar terms, but since that time the Real has appreciated against the dollar with the result that costs for pulpwood traded in the open market in Brazil now are close to the global average hardwood fiber price index (HFPI), WRQ explains. Eucalyptus fiber prices in the 1Q/10 were about 60% higher than five years ago, it adds.

Demand for Eucalyptus logs has increased in some regions of Brazil not only from pulp and panel manufacturers, but also from some sawmills that are producing lumber from both pine and Eucalyptus for the construction market. The increased demand for logs has not changed stumpage prices much in the local currency, and it is not expected that they will increase much in the coming years because of the additional supply of wood that will be available from recently established plantations, according to WRQ.

During the past five years, the area of Eucalyptus plantations has expanded by more than 7% annually. The pulp industry consumes about 45% of harvested Eucalyptus logs, while an estimated 48% is used for fuelwood and for making charcoal for the steel industry, WRQ says. A growing but still small consumer of Eucalyptus is the sawmilling sector that last year used approximately 4% of the total harvest of logs.

There is still not much interest in utilizing Eucalyptus fiber for the manufacturing of wood pellets in Brazil, neither for domestic nor for export markets. Investments in pellet plants have been limited and are not likely to grow unless prices for wood pellets in the major export markets in Europe improves, WRQ notes. More information is available online.



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