WORLD MARKETS
Fibre costs for pulp reach new highs
Wood costs account for about 60% of the production costs when manufacturing pulp for paper. Wood fibre costs have gone up about 25% since early 2009, reaching record levels in the second quarter of this year, according the Wood Resource Quarterly.
$109.52/oven-dry metric tonne (odmt) in the June quarter, a 3.7% increase from the previous quarter and 23% higher than two years ago. In local currencies, wood chip and pulplog prices have increased the most in the US Northwest, Western Canada, Russia and Finland. The weakening US dollar against most global currencies in the second quarter resulted in higher fibre prices in all 18 regions covered by the WRQ. The Hardwood Wood Fibre Price Index (HFPI)
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reached a new all-time-high in the second quarter at $116.44/odmt, which was 5.5% higher than the March quarter and almost 27% higher than in early 2009. Recently, hardwood prices have gone up the most in Indonesia, Finland, Russia and Brazil. Wood fibre prices, which currently are at or close to record highs, have fluctuated quite substantially the past 24 years the WRQ has tracked global forest industry markets. Prices trended downward during most of the 1990s and early 2000 when they were 60% below current levels. This was followed by a substantial increase from 2002 to 2008 with wood costs reaching record levels in early 2008, only to plummet almost 20% in late 2008 with the onset of the global recession. In 2009 and 2010, wood fibre markets have strengthened as a result of higher prices for market pulp, limited availability of wood chips from sawmills worldwide and a weakening US dollar against most currencies. It is interesting to note that the SFPI index has been higher for most of the past 24 years; it was not until 2009 that the hardwood price index surpassed the SFPI. In the second quarter of this year, the global hardwood fibre price was 6.3% higher than the softwood fibre price as reported in the WRQ. Wood costs have gone up not only in real terms but also as a percentage of the total production costs when manufacturing pulp. The global average wood cost share of the total cash cost has increased from 52% in 2005 to 60.9% in the first quarter of this year, according to consultant and market intelligence firm Fisher International. The wood cost percentage varies from around 50% in New Zealand and Canada to over 70% in China, Indonesia and Brazil.
International Forest Industries | OCTOBER/NOVEMBER 2011 15
ood fibre costs continued to go up for the global pulp industry in the second quarter of this year, having trended upward since early 2009, according to market report Wood Resource Quarterly (WRQ). The Softwood Wood Fibre Price Index (SFPI) reached
Wood fibre prices for pulp continue to climb
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