Wood Resources International LLC: Weaker Pulp Markets Are Forcing Pulp Manufacturers Worldwide to Reduce Costs, Resulting in the Lowest Softwood Wood Fiber Prices Seen since 2010

Fri Dec 7, 2012 12:41pm EST

* Reuters is not responsible for the content in this press release.

Wood Resources International LLC: Weaker Pulp Markets Are Forcing Pulp Manufacturers Worldwide to Reduce Costs, Resulting in the Lowest Softwood Wood Fiber Prices Seen since 2010

The declining prices for softwood pulp during much of 2012 have forced many pulp mills to try to cut wood fiber costs to remain profitable. As a consequence, the wood fiber price index (SFPI) has continuously declined the past year and, during the 3Q/12 was at its lowest level since 2010, according to the Wood Resource Quarterly.

Prices for softwood market pulp (NBSK) prices have trended downward for more than a year from their record highs of over $1000 per ton in the summer of 2011. In the 3Q/12, prices had fallen to between $750-800/ton in Europe and were about 50 dollars higher in the US. This relatively long-lasting price decline seems to have come to an end this fall, as there are now pulp producers negotiating higher prices again. List prices for December are in the range of $820-870/ton depending on if the deliveries are to Europe or North America.

The lower pulp prices have resulted in downward price pressure on wood fiber prices in many high wood cost regions around the world as pulp companies have seen product prices approach production costs. When profit margins for pulp mills are being squeezed, one of the first step taken to improve profitability is often to try to reduce the wood costs, since those costs typically account for 60-70 percent of the production costs when manufacturing pulp.

Prices for pulplogs and wood chips fell in the local currencies in most of the key regions worldwide in the 3Q/12, according to the Wood Resource Quarterly (www.woodprices.com). However, because the US dollar weakened against most currencies, wood prices in US dollar terms did not decline as much in the third quarter.

The Softwood Wood Fiber Price Index (SFPI), which is based on US dollars, was down another 0.5 percent from the 2Q/12 to US$100.05 per oven-dry metric ton (odmt). This was the fifth consecutive quarterly decline, and the index has now fallen 8.7 percent since early 2010. The biggest price declines were seen in the Northwestern US, Germany, Spain and Russia.

Hardwood fiber prices started to increase in some regions around the world in the 3Q/12, which resulted in the first increase of the Hardwood Wood Fiber Price Index (HFPI) in over a year, as reported in the WRQ. The Index increased by $1.56/odmt from the 2Q/12 to $106.44/odmt in the 3Q/12. Hardwood fiber prices increased the most in Russia, Eastern Canada and Brazil.

The price outlook for wood prices in the fourth quarter is mixed, with a stabilizing of prices in most softwood pulp-producing countries but also continued price declines in a few regions.

Global timber, pulpwood and biomass market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, established in 1988 and with subscribers in over 25 countries, tracks market developments as well as sawlog, pulpwood, lumber and pellet prices in most key regions around the world. To subscribe to the WRQ, please go to www.woodprices.com

Wood Resources International LLC (WRI), an internationally recognized forest industry-consulting firm established in 1987, publishes two quarterly timber price reports and have subscribers in over 25 countries. The Wood Resource Quarterly, established in 1988, is a 50-page market report and includes delivered sawlog prices, pulpwood and wood chip price and market commentary to developments in global timber, biomass and forest industry. The other report, the North Americam Wood Fiber Review, tracks prices of sawlogs, pulpwood, wood chips and biomass in Canada and the US.

This information was brought to you by Cision http://www.cisionwire.com

Wood Resources International LLC
Hakan Ekstrom
+1 425 402 8809
info@wri-ltd.com
www.woodprices.com