Pulpwood Prices Escalate in Western U.S.
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Pulp mills in the Western U.S. have seen their wood costs go up for four consecutive quarters, according to the North American Wood Fiber Review (NAWFR), Seattle, Wash., USA. Together with Quebec, Canada, this region had the highest second quarter wood fiber costs in North America.
Douglas-fir and hemlock residual chip prices in the U.S. Northwest were up 42% between the second quarter of last year and the second quarter of this year, reaching their highest levels since early 2008, NAWFR reports. Pulp log prices have increased more than for wood chips, reaching a 16-year high in the second quarter of this year. Historically, the region's pulp industry has relied on 70% - 80% sawmill residuals for its fiber furnish, but in 2011, softwood residuals accounted for approximately 55% of the softwood fiber receipts as reported by the Forest Products Association, with the remaining being chips manufactured from roundwood.
The current price surge in the Western U.S. has been the result of four primary factors: sawmill lumber production well below historical volumes, high pulp mill production due to strong product prices, a reopened pulp mill in the state of Washington, and strong Chinese demand for logs, NAWFR notes.
Violent storms in Mississippi and Alabama, flooding along the Mississippi River, and wildfires primarily in Georgia and Texas interrupted the regular flow of wood fiber in the U.S. South during the second quarter. These extreme conditions resulted in curtailments of a few pulp mills and chipping facilities and temporary reductions in fiber demand.
To some extent, this balanced out the reduction in pulpwood production, NAWFR adds. While salvaging is difficult and more costly than ordinary timber harvesting, the sheer volume of wood that is under pressure to be brought in before it deteriorates will bring a surge of supply to the market.
Softwood and hardwood pulpwood prices in the second quarter were unchanged from the previous quarter, according to NAWFR, but can be expected to decline in the third quarter as a result of the large volume of damaged wood in the region. With other North American regions experiencing significant increases in wood costs in the second quarter, the South's low, stable wood prices continue to make the region's pulp industry very competitive, NAWFR points out.
More information is available online.
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