Wood Resources Quarterly: The Global Forest Industry in the 2Q/2015

The following are excerpts from the 2Q 2017 issue of the Wood Resource Quarterly (WRQ), Seattle, Wash., USA. To subscribe to the full 56-page market report, go to the WRQ web site.   

Special Report: Global Sawmill Production Cost Margins 2005-2017 

• The Global Sawlog Price Index (GSPI) was up 2.4 % from the 1Q/17 and 3.5% higher than in the 2Q/16.
• The Euro-based European Sawlog Price Index (ESPI-€) was up 2.6% q-o-q and 2.0% y-o-y.
• Both WRI (Wood Resources International) wood fiber price indices were up slightly from the 1Q/17. However, the softwood fiber prices index was down 5.1% from a year ago. 
• Global softwood lumber trade increased during the 1H/17 and lumber prices have trended upward around the world. 
• U.S. pellet exports were up to 3% during the first six months of 2017 and Canadian shipments fell 18% compared with 1H/16.

Global Timber Markets 

• Sawlog prices were up quarter-over-quarter in practically all regions of the world in the 2Q/17. The biggest increases were seen in Central and Eastern Europe while there were modest price declines in the U.S. South, Coastal British Columbia, Quebec, and Brazil.
• Although European sawmills continue to have some of the world’s highest raw-material costs, the discrepancy between the Global Sawlog Price Index (GSPI) and the European Sawlog Price Index (in U.S. dollar terms) has fallen, bottoming out in the first quarter of 2017 to reach its lowest level in more than 10 years, according to the WRQ.                                                 

Global Pulpwood Prices 

• Both the WRI global wood fiber price indices inched up in the 2Q/17 because of a weaker U.S. dollar and higher prices in the local currencies in many of the 17 regions that the two indices are comprised of.
• In the 2Q/17, the Global Softwood Fiber Price Index (SFPI) was up 0.1% from the previous quarter to $85.10/odmt, which was the first q-o-q increase since the 2Q/16. The biggest price increases (in dollar terms) occurred in the U.S. Northwest, the Nordic countries, Spain, Russia, and Chile.
• The Global Hardwood Fiber Price Index (HFPI) also experienced a modest increase in the 2Q/17, mainly because of higher prices of hardwood pulp logs throughout Europe and Russia, as reported in the Wood Resource Quarterly.

• Higher pulp production in Latin America contributed to a rise in global market pulp production by about 0.5% during the first five months of 2017 compared with the same period in 2016. During the same period, production fell in North America partly because of the seasonal maintenance downtime of the pulp industry during the spring.
• Strong demand and tighter supply during the spring pushed pulp prices upward in Europe, North America, and China, with hardwood pulp price increasing the most. The price discrepancy between NBSK (northern bleached softwood kraft pulp and BHK (bleached softwood kraft pulp) has tightened considerably compared with 2016.

• International trade of softwood lumber is on pace to a new record high in 2017, if the trend from the first six months of 2017 continues in the second half of the year.
• Of the 10 largest lumber-exporting countries in the world, Russia, Finland, Austria, and Ukraine increased shipments the most year-over-year during the first half of 2017. Russia alone, has accounted for 22% of global lumber trade so far in 2017, which is up from 15% a decade ago.  
• During the first five months of 2017, lumber production in the U.S. South bounced back after having declined during the second half of 2016. The total production output from January through May was 7.3% higher this year compared with the same period in 2016.
• Lumber prices in both the U.S. and Canada have trended upward for almost two years and reached 13-year highs in July.
• Prices for lumber in the Nordic countries continue to be depressed in U.S. dollar terms, although they have moved up slightly during the 2Q/17. Current price levels are close to the lowest they have been in eight years.
• Demand for softwood lumber has picked up in China in 2017 with import volumes during the first seven months being 16% higher than during the same period in 2016. By far, the biggest jump in supply sources has been from Russia.

• Global trade of wood pellets has experienced a dramatic growth with a doubling of shipments to 16 million tons in 2016. There are four countries, the U.K., Denmark, South Korea, and Italy, that currently consume almost 80% of the world’s traded pellets.