Global hardwood and softwood fibre price indices increased over past two years

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According to Wood Resource Quarterly, wood chip and pulp log prices rose substantially in most countries over the past year in the local currencies.

For example, in the Nordic countries, domestic prices were up about 20% from Q4 2021 to Q4 2022, and in central Europe, wood fibre costs increased by 30-50% over the same period. Pulpwood prices in Latin America rose by 25-40%, while wood price in Canada increased slightly less, 15-35%. The US South was the only region where prices have remained unchanged over the past year.

In US dollar terms, global wood fibre prices have generally increased less than in local currencies the past year because of the strengthening dollar. Pulp mills have grappled with some of the highest wood costs in over 10 years.

Wood Resource International’s (WRI) two global wood fibre price indices have trended upward for two and a half years and were at eight-year highs in Q4 2022.

The Global Hardwood Fibre Price Index (HFPI) has increased the most over the past few years, from US$78.79 per bone dry metric tonne (bdmt) in Q3 2020 to $100.07/bdmt in Q4 2022, a 27% increase.

The Global Softwood Fibre Price Index (SFPI) also rose during the same period, about 13%, from $93.13/bdmt to reach $104.79/bdmt in the 4Q/22.

Wood fibre costs are, by far, the highest cost component when manufacturing wood pulp.

In Q4 2022, wood costs accounted for almost 60% of the cash cost for pulp produced worldwide, according to FisherSolve from ResourceWise. The other cost shares were energy at 17%, chemicals at 14%, materials at 5%, and labour at 5%.

There is a significant variation in wood cost percentages depending on the country, ranging between 45-75%. The Nordic countries and Germany are at the low end of the range for wood costs, with energy accounting for a relatively high percentage.

The highest wood cost shares are typically in Asia, including China and Japan, with the energy and chemicals shares often below 10% of total cash costs.

Source: Wood Resource Quarterly