Displaying items by tag: Wood Resource Quarterly
Global sawlog prices fell in late 2011, especially in lumber export-oriented
Global sawlog prices fell in late 2011, especially in lumber export-oriented countries such as Western Canada, Finland, Sweden, Russia and New Zealand, reports the Wood Resource Quarterly
Weakening lumber markets in Asia and Europe reduced demand for sawlogs in many countries late last year. As a result, log prices in a number of the major lumber-producing countries in the world fell during the second half of 2011, according to the market report the Wood Resource Quarterly.
The full article can be found in the attached PDF file below.....
Wood fiber costs for pulp manufacturers declined in the 4Q/11 as pulp prices fell
Wood fiber costs for pulp manufacturers declined in the 4Q/11 as pulp prices fell – with Global Wood Fiber Price Indices dropping 3.5%, reports the Wood Resource Quarterly
Global demand for pulp has declined and pulp prices fell during the second half of 2011. As a consequence, prices for wood fiber, the highest cost component when producing pulp, were down throughout the world, as reported by the Wood Resource Quarterly. The Global Wood Fiber Indices for softwood and hardwood fiber declined 3.5% from the 3Q/11.
Global pulp prices fell by about 20 percent from July to December last year. Weakening demand for pulp and lower product prices squeezed pulp company profit margins, so many companies tried to reduce their costs for wood fiber, which represents the largest cost component when manufacturing pulp.
There has been a long-term trend in the pulp industry of wood costs increasing as a percentage of the total production costs. In the 3Q/2011, this share had reached 63.5 percent on a worldwide basis, up from only 53 percent in 2005, according to Fisher International. However, this share can vary substantially, from a current low of 52 percent in Eastern Canada to as high as 73 percent in China. For this reason, tracking wood fiber prices over time has become more important when comparing competitiveness of different regions worldwide.
In the 4Q/11, the US dollar continued to strengthen against the local currencies of all of the countries covered by the Wood Resource Quarterly (WRQ) except Japan. This development, together with the downward price pressure on pulplog and wood chips in local currencies in practically all of the 18 regions in the world covered by the WRQ resulted in a decline of both global wood fiber indices. The Softwood Wood Fiber Price Index fell for the second straight quarter to US$105.30 per oven-dry tons (odmt) in the 4Q/11. This was down 3.3 percent from the previous quarter, but 1.6 percent higher than 4Q/10. The biggest price declines took place in Western Canada, Brazil, Spain, Germany and Finland.
The Hardwood Wood Fiber Price Index fell by 3.6 percent from the 3Q/11 to US$113.69/odmt. Despite this drop, this was still 5.0 percent higher than during the 4Q/10 and the third highest level ever recorded. The biggest 3rd and 4th quarter price reductions occurred in Spain, Finland, Brazil and Chile.
Wood fiber costs are likely to continue downward in a number of markets in 1Q/2012, particularly in the Nordic countries, Western Canada and the US as pulp prices continue to be substantially below the record-high levels from last summer.
China is now the world’s largest importer of softwood lumber and logs
China is now the world’s largest importer of softwood lumber and logs despite a slowdown in imports during the 4Q/11, reports the Wood Resource Quarterly
Reduced activities in the housing construction sector in China decreased importation of softwood logs and lumber in late 2011, reports the Wood Resource Quarterly. Despite the decline in the 4Q, total imports during 2011 reached a record high, making China the largest importer of logs and lumber in the world.
Seattle, USA. Importation of softwood logs and lumber to China has increased continuously over the past 15 years, and in 2011 the country was the largest importer of softwood lumber and logs in the world, according to the Wood Resource Quarterly. Total import value equaled almost eight billion US dollars last year, which was an increase of 57 percent from 2010, and up from only 70 million dollars 15 years ago. Annual growth over the past five years has been almost 30 percent, and over the past 15 years, the CAGR has been as high as 36 percent.
Imports of softwood lumber have increased faster than imports of softwood logs over the past few years, but log imports still constitute a higher share of the total import value of softwood products. After having increased for seven consecutive quarters, the importation of softwood logs and lumber fell for the first time in the 4Q/11 because of reduced domestic demand and high inventories at many of the country’s ports. The decline was 14 percent from the 3Q/11, but the total import value was still higher than the fourth quarter in 2010.
By volume, importation of softwood log and softwood lumber to China fell 10 percent in the 4Q/11 as compared to the previous quarter. Importation of logs and lumber from
Russia decreased the most, while lumber from New Zealand and logs from Canada actually increased slightly during the fourth quarter.
Much of the increased import demand for softwood raw-material has been, and continues to be, driven by the fast expansion in the house construction sector combined with the fact the China lacks domestic forest resources to meet the growing demand for most forest products.
A tightening monetary policy with a restricted money supply resulted in reduced activities in the construction sector in the second half of 2011. It has also been reported that there were overstocked inventories of real estate (over 20 months of unsold inventory in Beijing and Shanghai), and that housing transaction volumes in many big cities fell by more than 50 percent in the fourth quarter. Societe Generale reported that housing starts were down 25 percent in December as compared to the same month in 2010.
It can be expected that the housing market will continue to face headwinds during the first half of 2012 unless the Chinese government steps in to ease the country’s monetary policy. As a consequence, the prospects for log and lumber imports will be faced with uncertainty short-term, but will likely continue to trend upward long-term.
Wood chip exports from Latin America a record high in 2011
Wood chip exports from Latin America reached a record high in 2011, with pulp mills in Japan and Europe being the major export destinations, reports the Wood Resource Quarterly.
Global trade of wood chips has gone up substantially the past two years. Hardwood chip export from Chile, Uruguay and Brail was up 43 percent in 2011 compared to 2009, as reported by the Wood Resource Quarterly. A clear majority of the increase was Eucalyptus chips destined for pulp mills in Japan and Europe.
Seattle, USA. Wood chip exports from Latin America are on track to reach a record high of almost eight million tons in 2011, reports the Wood Resource Quarterly. This would be an increase of seven percent from last year and of almost 60 percent higher than in 2006. Chile is by far the biggest exporter, accounting for two-thirds of the total shipments from the continent, while Brazil and Uruguay both account for about 16 percent each. In 2011, Chile was the world’s second largest supplier of hardwood chips after Vietnam. Latin America’s hardwood chip export volumes accounted for approximately 50 percent of globally traded wood chips, a share that has grown from 34 percent five years ago.
Historically, between 80-90 percent of the exported wood chips from Latin America have been destined for Japanese pulp mills, but there has been a diversification of consumers over the past few years. Although shipments to Japan have gone up by over 30 percent from 2006, the share of total exports has declined and is currently around 70 percent.
The biggest change from five years ago is that pulp mills in Europe have been buying much more Eucalyptus chip, particularly from Chile and Uruguay. In 2011, total shipments to Europe reached almost 1.7 million tons, which was slightly lower than 2010 but more than a doubling from 2009, according to the WRQ. The three major importing countries in Europe are Spain, Portugal and Norway. In addition, there have also been a few shipments to Finnish and Swedish pulp mills the past few years.
New destinations for Eucalyptus chips from Latin America the past five years include Morocco, Turkey and China. There are expectations that Chile will increase its shipments to China in the coming years because of higher demand from new pulp mills in the country.
US woody biomass prices have dropped the past three years
US woody biomass prices have dropped the past three years; west coast prices are the lowest in the country, reports the North American Wood Fiber Review
Relatively low fossil fuel prices have reduced the demand and prices of woody biomass throughout the US the past three years, reports the North American Wood Fiber Review. The Pacific Northwest currently has the lowest biomass prices, slightly lower than the South, while the Northeast continues to have among the highest costs in the country.
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Weaker lumber markets causing global sawlog prices to fall
Weaker lumber markets are causing global sawlog prices to fall for first time since early 2009, reports the Wood Resource Quarterly
Slowing lumber markets throughout the world have resulted in declining sawlog prices in many of the major lumber-producing regions in Europe and North America, according to the Wood Resource Quarterly. The biggest price reductions occurred in Japan, Sweden, Poland and Russia.
With weaker demand for lumber around the world, sawlog prices fell in a majority of the 21 markets tracked by the Wood Resource Quarterly (WRQ). The Global Conifer Sawlog Price Index (GSPI) declined in the 3Q for the first time since the 1Q/09. With a few exceptions, prices fell in both local currencies and in US dollar terms.
The only region that saw any substantial price increase in the 3Q was British Columbia, where prices were up 5-7 percent from the 2Q. This region has benefited from higher lumber exports and production has gone up during 2011.The price for Coastal Hemlock rose over three percent in the 3Q, while the price for spruce-pine-fir (SPF) logs in Interior BC rose nearly seven percent. Prices in both regions were the highest they have been since the global financial crisis in late 2008.
The biggest price declines the past quarter occurred in Japan, Sweden, Poland and Russia; prices were down between 6-12 percent from the 2Q/11. The three latter
countries are major exporters of lumber, and shipments to European markets and Northern Africa have fallen this summer and fall.
Wood costs have gone down for many sawmills throughout the European continent in the 3Q, mostly due to slowing lumber sales and an expectation of lower lumber production levels during the winter months. In the Nordic countries, there were a number of announcements of curtailments for the 4Q/11 and the first quarter of 2012. Although sawlog prices fell in a majority of the ten countries in Europe covered by the WRQ, they were still higher than the third quarter last year. For most markets, log prices have come up between $15-25/m3 during the past 12 months, with only Western Russia and Norway seeing minor price increases.
Many of the continent’s sawmills are currently paying close to the highest sawlog prices seen in at least 17 years, and this is occurring at a time when lumber prices are far from any record highs, and are even declining in some markets. Because of the weakening lumber demand, it can be expected that log prices will soften in the coming months.
Global Timber and Wood Products Market Update
Global Timber and Wood Products Market Update
Global hardwood pulp producers face higher wood fiber costs and lower pulp prices, reports the Wood Resource Quarterly
Profit margins are being squeezed for many hardwood pulp producers worldwide with higher wood fiber costs and lower product prices. The hardwood wood fiber price index (HFPI) reached a 24-year high in the 3Q/11 at the same time as hardwood pulp prices fell by 26% from June through October, reports the Wood Resource Quarterly.
Seattle, USA. The global demand for market pulp has been weakening for the past four months, particularly that of hardwood pulp (BHKP). The market report Pulpwatch reports that global shipment of BHKP pulp fell from 1.76 million tons in June to 1.41 million tons during July. Although shipments picked up to 1.57 million tons in August, the outlook for the next six months is for lower demand and reduced pulp production as compared the first half of 2011.
Hardwood pulp prices (BHKP) have fallen steadily during the fall and were down by 26 percent from June to the early November, according to FOEX. At the same time as pulp prices have fallen, the wood costs have increased, which has squeezed the profit margins for many producers of hardwood pulp. Wood cost as a percentage of the Eucalyptus pulp (EuBKP) price has gone up steadily for five consecutive quarters, from 23 percent in the 2Q/10 to 32.2 percent in the 3Q/11, as reported in the Wood Resource Quarterly. The relative wood cost is currently substantially above the twenty–year average of 23 percent.
Pulp mills in Brazil, Indonesia, Japan, China and Chile saw the biggest increases in hardwood fiber prices the past year, while the rise in wood costs in North America and Europe have been more modest. The Hardwood Wood Fiber Price Index (HFPI) rose for the fifth quarter in a row, reaching US$117.91/odmt, an increase of 14 percent since last summer and an all-time high, according to the Wood Resource Quarterly. Conversely, The Softwood Wood Fiber Price Index (SFPI) fell by less than one percent to $108.90/odmt, which was the first decline since the 2Q/10. In addition to the exchange rate adjustments, wood prices also fell in the local currencies in Russia, France and Spain.
The Softwood Wood Fiber Price Index has been higher than HFPI for 21 of the past 24 years; it is only the past three years that HFPI has been sold at a premium, and the 3Q/11 premium of US$9.01/odmt is the greatest to date. This is of note because over the past few years, some softwood pulp producers had switched to hardwood or invested in hardwood pulp capacity to take advantage of historically lower hardwood fiber costs and higher profit margins. In light of these recent price and cost developments, producers might consider returning to using more softwood pulp in their product mix, whether for market pulp or in their integrated pulp and paper facilities.
New Zealand’s log exports to China account for one-third of the country’s timber harvest in 2011
Log exportation from New Zealand continues to rise at a record pace, with almost onethird of the country’s timber harvest being processed at sawmills in China. The high demand for logs from overseas has increased domestic sawlog prices to their highest levels in 15 years, according to the Wood Resource Quarterly.
Log exports from New Zealand in 2011 are set to reach a new record high. During the first eight months, total shipments were 25 percent higher than the same period last year (54 percent higher by value) and total exports for 2011 may reach as high as 13 million m3, which is more than a doubling from just three years ago. It is worth noting that almost half of the timber harvest in the 2Q was shipped overseas in log form and that almost one-third of the timber harvest in New Zealand is shipped to Chinese sawmills.
While log exports have increased substantially this year thanks to demand in China, lumber exports have actually declined from last year. This highlights the concern in the industry that domestic sawmills increasingly have difficulty competing for logs with the log exporters and thus may have to reduced production and the layoff of employees. Sawlog costs for domestic sawmills have continued to go up during 2011 because of competition from the export market. Pine sawlog prices reached record highs in the 3Q/11 with almost a doubling in US dollar terms from early 2009. With the recent price increases, log costs in New Zealand are just below the Global Sawlog Price Index (GSPI), as reported in the Wood Resource Quarterly.
The steady increase in log exports the past five years may very well continue in the coming 15 years as the theoretical harvest level in New Zealand is set to double to 55 million m3 by 2024. Most observers in the industry agree that, for a number of reasons, this timber harvest scenario is less likely. Depending on market conditions, a more realistic level of annual timber harvests in 15 years would be between 35 and 45 million m3 annually. Even this lower harvest outlook alternative would increase available log supply from the current levels by over 50 percent.
Global Timber and Wood Products Market Update
The Global Sawlog Price Index reached a 16-year high in the 2Q/11; the biggest price increases occurred in Europe, Canada, Russia and New Zealand, reports the Wood Resource Quarterly
Increased consumption of softwood lumber throughout the world has moved sawlog prices to new highs in 2011. The Global Conifer Sawlog Price Index (GSPI) reached a 16-year record high in the 2Q/11, with the greatest increases over last year’s prices occurring in Latvia, Poland, Japan, Russia and Germany, according to the Wood Resource Quarterly.
Seattle, USA. Wood costs often account for 65-75 percent of the production costs when manufacturing softwood lumber. This cost has trended upwards for over two years in many of the major lumber-producing countries around the world, as reported in the Wood Resource Quarterly.
The higher sawlog costs have been the result of growing demand for lumber, not only in the traditional markets of Europe, the US and Japan, but also in China, the Middle East and Northern Africa. For example, the biggest gains in exports for the Nordic countries this year has been to Morocco, a new fast growing market for wood products, and Egypt is now the second most important export market for sawmills in Finland.
China’s increasing demand for wood products is a major factor in the increase in log prices in regions supplying China with lumber, including Western US, British Columbia and New Zealand.
In the 2Q/11, the Global Conifer Sawlog Price Index (GSPI) reached a new all-time high of US$92.27 per m3. This was 5.6 percent more than the previous quarter, and an almost 20 percent jump from the past year. The GSPI has gone up every quarter since the 1Q/09 when the Index was at US$66.10/m3. This almost 40 percent increase in two years is due not only to the weakening of the US dollar against all other currencies in the Index, but also to the higher costs of logs in local currencies. According to the Wood Resource Quarterly (WRQ), the biggest price adjustments in local currencies since early 2009 have occurred in Latvia (+58%), Poland (+39%), Japan (+36%), Russia (+35%) and Germany (35%).
Countries in Western Europe, Japan and China currently have the highest sawlog prices of the 21 regions tracked by the WRQ, while prices in Western Canada, Chile, US South and Russia are lower than the global average. This ranking has not change much the past few years with the exception of the Baltic States of Latvia and Estonia, which now are below the GSPI after having been above the global average three years ago.