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May 21, 2011
SEATTLE, Washington, May 21, 2011/ Troy Media/ – Higher lumber production, increased log trade and a weak U.S. dollar were three factors that pushed sawlog prices up in dollar terms worldwide in the 1Q/11. In many regions, prices reached their highest levels since I started tracking log prices in 1995.
The Global Sawlog Price Index (GSPI) increased for the eighth consecutive quarter to an all-time high of US$88.14/m3. In two years, the GSPI has gone up by 33 per cent, which is substantially more than the increase in global pulpwood prices.
Global pulpwood price
Wood fibre costs for pulp mills worldwide rose for the third consecutive quarter in the 1Q/11. The Softwood Wood Fiber Price Index (SFPI) increased 1.9 per cent in the 1Q, reaching US$105.60/odmt, the highest level since 3Q/08.
The U.S. Northwest, European markets, Chile, Australia and New Zealand saw the biggest wood fibre price increases this quarter. The Hardwood Wood Fiber Price Index (HFPI) was also up 1.9 per cent from the 4Q/10, and is now close to an all-time high of US$110.33/odmt. Fibre prices were up in most markets, with the highest increases in Europe, Australia and Chile, as Canada and Russia saw smaller price increases, and hardwood fibre costs even declined in the U.S. South.
Global pulp markets
Global pulp markets have not quite developed as many analysts forecasted a year ago. Rather than the predicted retraction in market pulp prices this spring, prices stayed strong and actually increased to record-high levels in the month of April. The NBSK price in Europe in early May was US$1008/ton, according to FOEX. During the first two months of 2011, production of market pulp was up five per cent compared to last year. The biggest increase was in Western Europe, which produced nine per cent more pulp in 2011 than in 2010.
Global lumber markets
Global demand for softwood lumber increased by about 18 per cent in 2010. This came after a year when wood consumption worldwide was the lowest it had been in almost 50 years. This upward trend in consumption has continued thus far in 2011, with the total volume consumed being around 20 per cent higher than the same period in early 2010.
Not surprisingly, it is China that has been the major driver in the higher demand for lumber. The country’s sawmills are far from being able to meet the increased demand, and as a result there has been a substantial increase in import volumes the past five year.
Lumber imports to Japan were up 21 per cent in the first quarter as compared to the same quarter last year. The biggest increases were in shipments from Sweden, Finland and Russia.
During the first two months of 2011, lumber production was up in most provinces of Canada. Ontario (28 per cent), Alberta (16 per cent) and Southern B.C. (16 per cent) saw the greatest inceases.
The housing market in the U.S. South has fared relatively better than the rest of the country, with higher lumber consumption than in other regions of the U.S. The weak building and construction market in Europe late last year resulted in lower lumber demand and, as a result, also lower lumber prices.
Global biomass markets
While the U.S. and Canadian domestic pellet industry struggled through another year of weak domestic market demand and overcapacity, pellet export shipments to Europe continued to rise, up 21 per cent in 2010. Prices for wood pellets in the three major markets in Europe, Sweden, Germany and Austria have gone up the past two years.
Hakan Ekstrom is the President of Wood Resources International LLC, which is an internationally recognized forest industry consulting firm established in 1987. The company also publishes two quarterly timber price reports tracking global forest products markets. The market reports have readers in over 25 countries.