Displaying items by tag: Wood Resources International LLC

Weaker pulp markets have resulted in lower wood chip and pulplogs prices worldwide, reports the Wood Resource Quarterly

Wood fiber costs, which can account for up to 70 percent of the production costs for a pulpmill, fell in many markets during the 1Q/12, according to the Wood Resource Quarterly. The biggest declines were seen in Western Canada, Europe and Brazil, while Chile, Australia and New Zealand experienced some minor price increases for pulplogs and chips during the quarter. 

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China log and lumber imports down in 1Q/12, with Russia and New Zealand suppliers hit the hardest, while North America gained market share, reports the Wood Resource Quarterly

China’s demand for logs and lumber fell in late 2011 and early 2012 because of their slowing housing market. However, over the past ten years, importation of wood products has increased dramatically, as reported in the Wood Resource Quarterly (www.woodprices.com). Lately, North American log and lumber exporters have increased their market share in China at the expense of exporters in Russia and New Zealand. 

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Wood pellet exports from the US and Canada to Europe reached a record high in the 4Q/11 thanks to increased demand in the United Kingdom, reports the North American Wood Fiber Review

Exports of wood pellets from North America to Europe reached a record of over two million tons in 2011, according to analysis reported in the North American Wood Fiber Review (www.woodprices.com). Canada has long been the main exporter of pellets but in the second half of 2011, the US caught up and exported an equal volume to Canada.    

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Wood costs for pulp mills and sawmills in Brazil have gone up over the past few years, reaching their highest levels in over 20 years in 2011, according to the Wood Resource Quarterly. However, towards the end of the year, Eucalyptus and pine log prices fell, mainly because of the strengthening US dollar.

Eucalyptus log prices in Brazil reached a peak in the 3Q last year, but fell back almost eight percent in the 4Q/11 in US dollar terms because of the strengthening dollar. Current price levels are still among the highest since the Wood Resource Quarterly (www.woodprices.com) started tracking Brazilian wood prices in 1990.

Prices for Eucalyptus pulpwood traded in the open market are high not only from a historical perspective, but also as compared to many other regions around the world.
Only pulp mills in Europe and Australia had higher hardwood fiber costs than Brazil in late 2011, while North America, Chile, Russia and Indonesia all had lower hardwood log prices than the world’s largest market pulp exporter.

Wood fiber cost is by far the most important cost component for Brazilian pulpmills, more so than for most other pulp mills in the world. In the 4Q/11, wood costs accounted
for as much as 72 percent of the total cash costs in Brazil, according to Fisher International. This is substantially higher than the global average of 61 percent.

For the sawmilling industry in Brazil, 2011 was a better year than the previous year, with higher demand both from their domestic market and from abroad. Lumber exports in
2011 were up six percent to their highest levels in three years, with shipments to China, Saudi Arabia, Mexico and Morocco increasing the most.

As a result of the higher lumber production, sawlog prices have trended upward for almost three years, reaching an all-time high in the 2Q/11, according to the Wood Resource Quarterly. During the second half of 2011, log prices fell in US dollar terms, while there were only small price adjustments in the Brazilian Real terms.

Domestic demand for lumber is expected to continue to improve in 2012 with the construction sector gearing up for the World Cup in soccer (2014) and the Olympic Games (2016). If the US dollar continues to strengthen against the Brazilian Real, exports may also contribute to a better year for the Brazilian lumber industry than that of the past
two years. This development is likely to put upward pressure on sawlog prices in the coming year.

Global sawlog prices fell in late 2011, especially in lumber export-oriented countries such as Western Canada, Finland, Sweden, Russia and New Zealand, reports the Wood Resource Quarterly 

Weakening lumber markets in Asia and Europe reduced demand for sawlogs in many countries late last year. As a result, log prices in a number of the major lumber-producing countries in the world fell during the second half of 2011, according to the market report the Wood Resource Quarterly. 

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Wood fiber costs for pulp manufacturers declined in the 4Q/11 as pulp prices fell – with Global Wood Fiber Price Indices dropping 3.5%, reports the Wood Resource Quarterly

Global demand for pulp has declined and pulp prices fell during the second half of 2011. As a consequence, prices for wood fiber, the highest cost component when producing pulp, were down throughout the world, as reported by the Wood Resource Quarterly. The Global Wood Fiber Indices for softwood and hardwood fiber declined 3.5% from the 3Q/11.

Global pulp prices fell by about 20 percent from July to December last year. Weakening demand for pulp and lower product prices squeezed pulp company profit margins, so many companies tried to reduce their costs for wood fiber, which represents the largest cost component when manufacturing pulp.

There has been a long-term trend in the pulp industry of wood costs increasing as a percentage of the total production costs. In the 3Q/2011, this share had reached 63.5 percent on a worldwide basis, up from only 53 percent in 2005, according to Fisher International. However, this share can vary substantially, from a current low of 52 percent in Eastern Canada to as high as 73 percent in China. For this reason, tracking wood fiber prices over time has become more important when comparing competitiveness of different regions worldwide.

In the 4Q/11, the US dollar continued to strengthen against the local currencies of all of the countries covered by the Wood Resource Quarterly (WRQ) except Japan. This development, together with the downward price pressure on pulplog and wood chips in local currencies in practically all of the 18 regions in the world covered by the WRQ resulted in a decline of both global wood fiber indices. The Softwood Wood Fiber Price Index fell for the second straight quarter to US$105.30 per oven-dry tons (odmt) in the 4Q/11. This was down 3.3 percent from the previous quarter, but 1.6 percent higher than 4Q/10. The biggest price declines took place in Western Canada, Brazil, Spain, Germany and Finland.

The Hardwood Wood Fiber Price Index fell by 3.6 percent from the 3Q/11 to US$113.69/odmt. Despite this drop, this was still 5.0 percent higher than during the 4Q/10 and the third highest level ever recorded. The biggest 3rd and 4th quarter price reductions occurred in Spain, Finland, Brazil and Chile.

Wood fiber costs are likely to continue downward in a number of markets in 1Q/2012, particularly in the Nordic countries, Western Canada and the US as pulp prices continue to be substantially below the record-high levels from last summer.

China is now the world’s largest importer of softwood lumber and logs despite a slowdown in imports during the 4Q/11, reports the Wood Resource Quarterly

Reduced activities in the housing construction sector in China decreased importation of softwood logs and lumber in late 2011, reports the Wood Resource Quarterly. Despite the decline in the 4Q, total imports during 2011 reached a record high, making China the largest importer of logs and lumber in the world.

Seattle, USA. Importation of softwood logs and lumber to China has increased continuously over the past 15 years, and in 2011 the country was the largest importer of softwood lumber and logs in the world, according to the Wood Resource Quarterly. Total import value equaled almost eight billion US dollars last year, which was an increase of 57 percent from 2010, and up from only 70 million dollars 15 years ago. Annual growth over the past five years has been almost 30 percent, and over the past 15 years, the CAGR has been as high as 36 percent.

Imports of softwood lumber have increased faster than imports of softwood logs over the past few years, but log imports still constitute a higher share of the total import value of softwood products. After having increased for seven consecutive quarters, the importation of softwood logs and lumber fell for the first time in the 4Q/11 because of reduced domestic demand and high inventories at many of the country’s ports. The decline was 14 percent from the 3Q/11, but the total import value was still higher than the fourth quarter in 2010.

By volume, importation of softwood log and softwood lumber to China fell 10 percent in the 4Q/11 as compared to the previous quarter. Importation of logs and lumber from
Russia decreased the most, while lumber from New Zealand and logs from Canada actually increased slightly during the fourth quarter.

Much of the increased import demand for softwood raw-material has been, and continues to be, driven by the fast expansion in the house construction sector combined with the fact the China lacks domestic forest resources to meet the growing demand for most forest products.

A tightening monetary policy with a restricted money supply resulted in reduced activities in the construction sector in the second half of 2011. It has also been reported that there were overstocked inventories of real estate (over 20 months of unsold inventory in Beijing and Shanghai), and that housing transaction volumes in many big cities fell by more than 50 percent in the fourth quarter. Societe Generale reported that housing starts were down 25 percent in December as compared to the same month in 2010.

It can be expected that the housing market will continue to face headwinds during the first half of 2012 unless the Chinese government steps in to ease the country’s monetary policy. As a consequence, the prospects for log and lumber imports will be faced with uncertainty short-term, but will likely continue to trend upward long-term.

Wood chip exports from Latin America reached a record high in 2011, with pulp mills in Japan and Europe being the major export destinations, reports the Wood Resource Quarterly.

Global trade of wood chips has gone up substantially the past two years. Hardwood chip export from Chile, Uruguay and Brail was up 43 percent in 2011 compared to 2009, as reported by the Wood Resource Quarterly. A clear majority of the increase was Eucalyptus chips destined for pulp mills in Japan and Europe.

Seattle, USA. Wood chip exports from Latin America are on track to reach a record high of almost eight million tons in 2011, reports the Wood Resource Quarterly. This would be an increase of seven percent from last year and of almost 60 percent higher than in 2006. Chile is by far the biggest exporter, accounting for two-thirds of the total shipments from the continent, while Brazil and Uruguay both account for about 16 percent each. In 2011, Chile was the world’s second largest supplier of hardwood chips after Vietnam. Latin America’s hardwood chip export volumes accounted for approximately 50 percent of globally traded wood chips, a share that has grown from 34 percent five years ago.

Historically, between 80-90 percent of the exported wood chips from Latin America have been destined for Japanese pulp mills, but there has been a diversification of consumers over the past few years. Although shipments to Japan have gone up by over 30 percent from 2006, the share of total exports has declined and is currently around 70 percent.

The biggest change from five years ago is that pulp mills in Europe have been buying much more Eucalyptus chip, particularly from Chile and Uruguay. In 2011, total shipments to Europe reached almost 1.7 million tons, which was slightly lower than 2010 but more than a doubling from 2009, according to the WRQ. The three major importing countries in Europe are Spain, Portugal and Norway. In addition, there have also been a few shipments to Finnish and Swedish pulp mills the past few years.

New destinations for Eucalyptus chips from Latin America the past five years include Morocco, Turkey and China. There are expectations that Chile will increase its shipments to China in the coming years because of higher demand from new pulp mills in the country.

 US woody biomass prices have dropped the past three years; west coast prices are the lowest in the country, reports the North American Wood Fiber Review 

Relatively low fossil fuel prices have reduced the demand and prices of woody biomass throughout the US the past three years, reports the North American Wood Fiber Review. The Pacific Northwest currently has the lowest biomass prices, slightly lower than the South, while the Northeast continues to have among the highest costs in the country.

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