Sawlog Prices Hit 16-Year High
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Wood costs often account for 65% - 75% of softwood lumber production costs. This cost has trended upwards for more than two years in many of the major lumber-producing countries around the world, the Wood Resource Quarterly (WRQ), Seattle, Wash., USA, reports. The higher sawlog costs have been the result of a growing demand for lumber, not only in the traditional markets of Europe, the U.S. and Japan, but also in China, the Middle East, and Northern Africa.
For example, WRQ points out, the biggest gains in exports for the Nordic countries this year has been to Morocco, a new fast growing market for wood products, and Egypt is now the second most important export market for sawmills in Finland. China's increasing demand for wood products is a major factor in log price increases in regions supplying China with lumber, including the western U.S., British Columbia (Canada), and New Zealand.
In the second quarter, the Global Conifer Sawlog Price Index (GSPI) reached a new all-time high of $92.27/m3. This was 5.6% more than the previous quarter, and an almost 20% jump from the past year. The GSPI has gone up every quarter since the first quarter of 2009 when the Index was at $66.10/m3. This almost 40% increase in two years is due not only to the weakening of the U.S. dollar against all other currencies in the Index, but also to the higher costs of logs in local currencies.
According to WRQ, the biggest price adjustments in local currencies since early 2009 have occurred in Latvia (+58%), Poland (+39%), Japan (+36%), Russia (+35%), and Germany (35%). Countries in Western Europe, Japan, and China currently have the highest sawlog prices of the 21 regions tracked by the WRQ, while prices in Western Canada, Chile, the U.S. South, and Russia are lower than the global average. This ranking has not changed much during the past few years with the exception of the Baltic States of Latvia and Estonia, which now are below the GSPI after having been above the global average three years ago.
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