Fiber Costs Trend Down in Most Parts of World
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Wood fiber prices trended downward in local currencies in many of the key pulp-producing countries of the world in the fourth quarter of 2012, according to the report Wood Resource Quarterly (WRQ), Seattle, Wash., USA. However, as a result of the weakening U.S. dollar, wood fiber prices actually increased in U.S. dollar terms in a number countries and the Softwood Wood Fiber Price Index (SFPI) was up slightly (+0.1%) in the 4Q/12 to $100.13/odmt. The biggest increases from the 3Q to the 4Q occurred in Eastern Canada, Finland, France, and New Zealand.
Price declines in local currencies were mainly the result of an increased supply of softwood fiber in regions with extensive lumber production. In the U.S. Northwest, chip prices fell as much as 27% during 2012 and pulp mills in the region had some of the lowest softwood fiber costs in the world in the 4Q/12.
Additional volumes of residual chips from increased lumber production, reductions in pulp production and pulp mill outages, and large supplies of pulp logs were all factors that contributed to the dramatic turnaround in fiber costs during 2012. A similar trend was seen in Western Canada, where prices in the 4Q/12 were down 22% from late 2011, reaching their lowest levels in three years.
Hardwood fiber price movements were mixed, with hardwood pulp log prices generally trending downward in many of the key hardwood pulp-producing regions in both local currencies and in U.S. dollar terms. This resulted in a decline in the Hardwood Wood Fiber Price Index (HFPI) to $104.80/odmt in the 4Q/12. This was down 1.5% from the previous quarter and 7.8% from the 4Q/11.
The biggest decline in hardwood fiber prices occurred in Brazil where Eucalyptus log prices have fallen continuously for more than a year from early 2011, when they were at their all-time highs. In the 4Q/12, prices in U.S. dollar terms were back down to the same levels as in early 2009. Few regions in the world currently have lower hardwood costs than Brazil.
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