WORLD MARKETS Global sawlog prices fall for first time since 2009
the Wood Resource Quarterly (WRQ). The Global Conifer Sawlog Price Index (GSPI) declined in the third quarter for the first time since the first quarter of 2009. With a few exceptions, prices fell in both local currencies and in US dollar terms in the third quarter. The only region that saw any substantial price increase in the third quarter was British Columbia, where prices were up 5- 7% from the second quarter. This region has benefited from higher lumber exports and production has gone up during 2011. The biggest price declines the previous
W
quarter occurred in Japan, Sweden, Poland and Russia; prices were down between 6-12% from the second quarter of last year. The three latter countries are major exporters of lumber, and shipments to European markets and Northern Africa fell over summer and fall. Wood costs were down for many sawmills
throughout the European continent in the third term, mostly due to slowing lumber sales and an expectation of lower lumber production levels during the winter months. In the Nordic
ith weaker demand for lumber around the world, sawlog prices fell in a majority of the 21 markets tracked by
countries, there were a number of announcements of curtailments for the fourth term and into the current quarter. Although sawlog prices fell in a majority of the 10 countries in Europe covered by the WRQ, they were still higher than the third quarter of 2010. For most markets, log prices have come up between $15-25/m3
during the 12 months to
end of September, with only Western Russia and Norway seeing minor price increases. Many of The Continent’s sawmills were paying close to the highest sawlog prices seen in at least 17 years, and this was occurring at a time when lumber prices are far from any record highs, and were even declining in some markets. Because of the weakening lumber demand, it can be expected that log prices will continue to soften.
Meanwhile, as a result of global wood pellet supply significantly exceeding demand during the last two to three years, industrial wood pellet prices in Europe have been flat to decreasing slightly on a euro basis. Prices increased from €115/t in July 2007 to €140/t at the beginning of 2009. Since then, they have declined to a low of €125/t at the end of 2010, and have increased slightly to €133/t at the end of 2011. Large pellet exporters to Europe (e.g., Canada, the US, the Baltics and Russia) tend to sell to the industrial market, while many European producers must sell to the higher- priced domestic wholesale market (+25%-30%), and the even higher-priced domestic ‘bagged’ DIY/retail market (+50%-55%). A very important factor in the global
production/consumption equation is the fact that the European market consumes about 85% of the world’s pellet production. This means that most large producers in non-European countries rely heavily on the European industrial pellet market.
Volatility in wood markets to continue
Relatively low fossil fuel prices have reduced the demand and prices of woody biomass throughout the US over 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 Log prices have bounced
around over the past couple of months with many saying that this is the sort of behaviour we should expect to see in this market for the foreseeable future, according to Agrifax, the leading New Zealand supplier of agricultural data.
There is still strong demand for
New Zealand logs in China even as there are reports of slowing growth. However, the Government is trying to cool the rampant property market by building more affordable housing. This is of course doing wonders for the demand for building materials
such as timber. Even with large volumes of logs coming out of the Pacific Northwest, New Zealand is remaining very strong in the Asian log market. Market share for New Zealand has slipped a little over recent months but volumes have increased and record volumes of logs are being exported to China from New Zealand each month. January has seen another lift in
the CFR price for logs in market. KS logs are now up to $124/JASm3 KI logs are $119/JASm3
and A Grade logs are $130/JASm3 . This is
a more substantial lift than seen last month. China was well balanced heading into the Lunar New Year, off-take is down as expected but so are deliveries. This means port inventories in China are steady at around 2.5 million m3 hundred thousand m3
. Three is the level
that tipped the market over last time. A careful watch on how quickly these inventories grew over the Chinese New Year and the impact on the market it will have.
14 International Forest Industries | FEBRUARY/MARCH 2012 ,
It will set the market tone for the next 3-6 months.
India has a sufficient inventory
and now needs this to drop before there will be any lift in demand. It’s expected that prices for February could also lift again but at the least should remain at current levels. However, once again the Chinese New Year could have affected on the market and force inventories to go high. Sea freight rates out of New
Zealand have remained soft for the past month in-line with global freight prices. Over the past month shipping rates have plummeted with the Baltic Dry Index now below 1,000 for the first time since January 2009. This index is an indication of global trade activity; low shipping rates indicate surplus shipping due to less demand for freight services globally.
The Agrifax Log Index is up again this month as prices between regions closed up slightly. While some regions experienced no change or even a
drop in prices others had significant gains. There is a possibility that the lift in log prices this month could be undone next month should inventory levels in China swell over the Lunar New Year period. Exports out of the Pacific North West were up in December after a decrease in logs leaving this region in November. These December exports should have reached markets in early January and coincide with the holiday period in China. North Island • Domestic: grades are down $7/t to NZ$5/t, pulping grades show a lift
• Export: grades are down NZ$5/t to NZ$15/t South Island • Domestic: grades are down $5/t to NZ$10/t, pulping grades show a lift
• Export: grades are down NZ$5/t to NZ$15/t.
First appeared on
www.nzxagri.com
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