Sawlog prices near 5-year low globally

The Global Sawlog Price Index (GSPI) in the 2Q/09, increased for the first time since late 2007, reaching $68.87/m3. The Index, which is based on conifer sawlog prices in 19 key regions worldwide from 1995 to present, was still close to its lowest level in five years. Prices were slightly higher in most world regions this quarter mainly because of a weaker US dollar. In the local currencies, log prices adjusted downward in practically all countries with Russia and Western Canada being the only exceptions.

Sawmills in Chile, Russia, Western US and Western Canada had the lowest wood raw material
costs in the 2Q, almost 35% below the global average. Although log prices fell over 20% in Germany and Austria during the past 12 months, these two countries still had substantially higher log costs than any other country tracked by the Wood Resource Quarterly (WRQ). The biggest fall in log costs the past year has been in the Baltic States, where prices were more than 50 percent lower than they were in the 2Q/08.

Continued weak lumber markets kept the demand for sawlogs low in Europe. The total lumber imports by the eight largest importing countries in Europe have fallen each month for the past two years and were, in April, just over one million m3, down from 1.75 million m3 in early 2007. The good news is that the fall has slowed down in recent months and that the demand from the repair and remodelling sectors is fairly healthy. Lumber export prices in Sweden and Finland were 45% lower in May than their peak two years ago, as reported in the Wood Resource Quarterly.

Lumber production in the US was 23% lower in May this year than in the same month last year, and 38% below May 2007. The biggest decline occurred in Western US where practically every sawmill has reduced operating rates this past year. The WWPA estimates that the sawmills in this region ran at 56% of practical capacity this spring.

Random Lengths Composite Lumber Index, which consists of a basket of 12 different species and grades, was at a twelve-year low in the first quarter. Early in the 3Q, lumber prices in North America started to move up as markets slowly improved.

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Issue date: August 25, 2009

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