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Global pulpwood costs increase by 17% since 2008

WEB EXCLUSIVE

Global pulpwood costs increase since 2008
Global market pulp production increased by 7 % in 2010, which increased the demand for raw wood material.


February 22, 2011
By Hakan Ekstrom | Wood Resources International

Feb. 22, 2011, Seattle, WA – Global market
pulp production increased by 7% in 2010, which increased the demand for raw
wood material. As a result, prices for wood chips and pulp logs were up in most
regions of the world, according to the Wood Resource Quarterly. The Softwood
Wood Fibre Price Index (SFPI) has increased by 16.5% since 2008, whereas the
Hardwood Wood Fibre Price Index (HFPI) increased by 17.7%.

Global pulp production in the second half
of 2010 was higher than many had anticipated, and pulp markets were better than
they had been the first six months of the year. The total production of
chemical market pulp in 2010 reached an estimated 45 million tons, which was
about 7% more than was produced in 2009. North America and Western Europe
increased production by 10% and 12%, respectively, whereas Latin America and
New Zealand reduced production slightly. Other regions, including Asia, Africa,
and Russia, also increased production in 2010.

High demand for raw wood material by the
pulp industry pushed the costs for wood fibre upward in the second half 2010.
Softwood chips and softwood pulp log prices were higher in most key markets
around the world in the fourth quarter of 2010. As a consequence, the SFPI
increased for the third consecutive quarter. The SFPI reached US$103.60/odt
(oven-dried tonne), which was the highest level since the beginning of the
financial crisis; the SFPI is now 16% above the price in the first quarter of
2009. The biggest price increases in the fourth quarter of 2010 occurred in the
U.S. Northwest, Sweden, Spain, and Brazil.

The HFPI has gone up faster than the SFPI
since early 2009. In the fourth quarter of 2010, HFPI was US$108.28/odt, which
was up 3.4% from the previous quarter and almost 18% higher than in the first
quarter of 2009. The HFPI has only been higher twice since its inception more
than 20 years ago. Pulp mills in Germany, Spain, France, and Brazil all had to
pay more for hardwood logs in their local currencies. In addition, the U.S.
dollar weakened against most currencies and therefore contributed to a higher
price index.

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One of the few regions that experienced
reductions in wood fibre costs in 2010 was the U.S. South, with prices about 10% lower in
the fourth quarter than in the first quarter. Wood prices in the U.S. South
were the lowest in all of North America in the fourth quarter of 2010, and pulp
mills in this region have benefited from some of the lowest wood fibre costs in
the world.


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