Wood Fibre Costs for Pulp Manufacturers Up Over Past Two Years

The cost of wood fibre for the world’s pulp industry has trended upward for over two years because of higher demand and a tightening regional supply of wood fibre. From the 1Q/17 to the 1Q/19, prices for pulplogs and wood chips (in the local currencies) have gone up in all 17 countries tracked by the WRQ. The only exception has been in Eastern Canada, where an oversupply of sawmill residues has put downward price pressure on both logs and chips. The biggest price increases the past few years have been seen in Western North America, the Nordic countries, Russia and Indonesia.

The Softwood Fiber Price Index (SFPI) inched up 0.5 per cent quarter-over-quarter in the 1Q/19. This was the third consecutive quarterly increase and resulted in the highest index seen since in late 2014. Of the regions covered by the index, Russia, New Zealand and the U.S. South contributed the most to this rise. However, there were also a few regions in the world where pulplog prices fell. Central Europe, for example, saw high supply of logs from storm and insect damaged trees – pushing log prices downward in late 2018 and early 2019.

Pulpmills along the U.S. Atlantic coast saw their wood fibre costs rise almost 10 per cent over the past year because of higher transportation costs and tighter log supplies related to difficult logging and transportation conditions. With the tight supply of wood fibre in the 1Q/19, prices for wood chips and pulplogs, in both the South Central and Southeastern states, reached their highest levels in almost seven years, reports the North American Wood Fiber Review. The average softwood chip price rose significantly for the first time in over five years.

With the weakening pulp and paper market and improved logging conditions, it is likely that softwood fibre prices will decline in many regions during the summer months.