Sawlog prices declining for first time since 2009

Dec. 12, 2011 – 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.

For more information on the Wood Resource Quarterly, please visit their website: www.woodprices.com .