WRI: Weakened US dollar drives global wood fiber price indices up 1.6% in 3Q 2020

In 3Q 2020, the Global Hardwood Fiber Price Index (HFPI) was up by 1.6% to $81.17/odmt, following a 16-year low in the previous quarter. The first q-o-q increase in almost two years was mainly driven by a weakening of the US dollar against currencies in all WRQ countries except Russia. Currencies in Europe and Oceania strengthened between 5%-10% from 2Q 2020 to 3Q 2020.

In the Nordic countries, hardwood prices in 3Q 2020 jumped 7% q-o-q (in US dollars) and were close to their highest levels in five years. Other countries that have seen price increases include CanadaChileFrance and Germany. Comparing wood fibre costs for the largest hardwood pulp producers worldwide shows that JapanChinaFinlandAustralia and Spain (in ranking order) had the highest hardwood fibre costs during this quarter. 

The high fibre costs in Japan and China are mainly due to their pulp industry’s reliance on imported wood chips. Although import chip prices have declined by 8% in Japan and 20% in China the past year, the wood costs they face are still substantially higher than in any other country in the world.  

Softwood fibre costs have also gone up for the global pulp industry in 3Q 2020, predominantly in the Nordic countries, FranceAustralia and New Zealand. However, there were a few exceptions, most notably in the Western US and Germany, where softwood chip prices fell by 16% and 7% from 2Q 2020, respectively. The price decline was mainly due to oversupply of residual chips from sawmills running at high operating rates. 

The Global Softwood Fiber Price Index (SFPI) was up 1.4% q-o-q in 3Q 2020 – the first increase in almost two years. The rise was mainly due to the weakening US dollar. In fact, in the local currencies, softwood chips and pulplog prices fell in most markets in 3Q 2020, especially in Europe.

Source:Wood Resources International LLC