Global sawlog prices jumped almost 8% in the third quarter of 2009 because of improved lumber markets in the U.S. and Europe, the Wood Resource Quarterly (WRQ), Seattle, Wash., USA, reports. In the third quarter, the Global Sawlog Price Index (GSPI) had the highest quarter-to-quarter jump in its 15-year history, according to WRQ. The Index increased for the third straight quarter and reached just over $73 per cubic meter.

Global sawlog prices started to move up in the fall after having reached a bottom in many markets earlier this year. The recent upswing has been the result of a tighter log supply but also because of improved operating rates at many sawmills in both the U.S. and Europe. The U.S., the Nordic countries, Central Europe, the Baltic States, and Russia have experienced the largest price increases (in local currencies) over the past six months.

The GSPI, which is based on conifer sawlog prices in 19 key regions worldwide, was $73.30 per cubic meter in the third quarter, up 7.6% from the previous quarter. Much of the increase was because the U.S. dollar weakened against most currencies in the WRQ regions, but there were also higher log prices in Europe in the local currencies. Despite the recent increase in the GSPI Index, it is still 15% lower than a year ago and 20.3% below the all-time-high in the fourth quarter of 2007.

The biggest declines in log prices (in U.S. dollar terms) since the peak in early 2008, have occurred in the Baltic States, the Nordic countries, and in Western North America. In these regions, prices are now more than 25% below their all-time highs. Log prices in the U.S. South, Central Europe, Latin America, and Oceania have fallen relatively less and are currently 5% - 10% below their peak about 18 months ago, WRQ notes.

Log prices have probably reached their bottom in this cycle last spring and it can be expected that they will continue the recent upswing in 2010 because of increased demand for lumber in the U.S., Europe, Asia, and Latin America. So far this year, Europe, Northern Africa, and China have been some of the most rapidly growing markets for lumber exporters, and this trend is likely to continue into next year. There is also some good news coming out of Russia, WRQ adds. Lumber exports increased slightly in 2009 compared with 2008 and might reach the third highest level on record. This is mostly due to the high demand for lumber in China. Softwood lumber shipments to China have been up almost 60% this year. The strong export lumber market has mostly benefited sawmills in Siberia and the Russian Far East. More information is available on the WRQ website.

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