Lowest softwood wood fibre prices seen since 2010

The declining prices for softwood pulp during much of 2012 have forced many pulp mills to try to cut wood fibre costs to remain profitable. As a consequence, the wood fibre price index (SFPI) has continuously declined the past year and, during the 3Q/12 was at its lowest level since 2010, according to the Wood Resource Quarterly.

Prices for softwood market pulp (NBSK) prices have trended downward for more than a year from their record highs of over $1000 per ton in the summer of 2011. In the 3Q/12, prices had fallen to between $750-800/ton in Europe and were about 50 dollars higher in the US. This relatively long-lasting price decline seems to have come to an end this fall, as there are now pulp producers negotiating higher prices again. List prices for December are in the range of $820-870/ton depending on if the deliveries are to Europe or North America.

The lower pulp prices have resulted in downward price pressure on wood fibre prices in many high wood cost regions around the world as pulp companies have seen product prices approach production costs. When profit margins for pulp mills are being squeezed, one of the first steps taken to improve profitability is often to try to reduce the wood costs, since those costs typically account for 60-70 percent of the production costs when manufacturing pulp.

Prices for pulp logs and wood chips fell in the local currencies in most of the key regions worldwide in the 3Q/12, according to the Wood Resource Quarterly (www.woodprices.com). However, because the US dollar weakened against most currencies wood prices in US dollar terms did not decline as much in the third quarter.

Source: Wood Resources International LLC, www.woodprices.com