The global forest industry in Q2/2017

Source:
WRQ/Fordaq
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Global value and volumes of timber, pulpwood, softwood lumber and biomass products have increased during the 2nd quarter of 2017.

Global Timber Markets

Sawlog prices were up quarter-over-quarter in practically all regions of the world in the 2Q/17. The biggest increases were seen in Central and Eastern Europe while there were modest price declines in the US South, Coastal British Columbia, Quebec and Brazil.

Although European sawmills continue to have some of the world’s highest rawmaterial costs, the discrepancy between the Global Sawlog Price Index (GSPI) and the European Sawlog Price Index (in US dollar terms) has fallen, bottoming out in the first quarter of 2017 to reach its lowest level in more than ten years, according to the Wood Resource Quarterly.

Global Pulpwood Prices

Both the WRI global wood fiber price indices inched up in the 2Q/17 because of a weaker US dollar and higher prices in the local currencies in many of the 17 regions that the two indices are comprised of. 50 55 60 65 70 75 80 85 90 95 Euro/m3 European Sawlog Price Index (ESPI-€) 1Q/99 - 2Q/17.

In the 2Q/17, the Global Softwood Fiber Price Index (SFPI) was up 0.1% from the previous quarter to $85.10/odmt, which was the first qo-q increase since the 2Q/16. The biggest price increases (in dollar terms) occurred in the US Northwest, the Nordic countries, Spain, Russia and Chile.

The Global Hardwood Fiber Price Index (HFPI) also experienced a modest increase in the 2Q/17, mainly because of higher prices of hardwood pulplogs throughout Europe and Russia, as reported in the Wood Resource Quarterly.

Global Pulp Markets

Higher pulp production in Latin America contributed to a rise global market pulp production by about 0.5% during the first five months of 2017 as compared to the same period in 2016. During the same period, production fell in North America partly because of the seasonal maintenance downtime at the pulp industry during the spring.

Strong demand and tighter supply during the spring pushed pulp prices upward in Europe, North America and China, with hardwood pulp price increasing the most. The price discrepancy between NBSK and BHK has tightened considerably compared to 2016.

Global Lumber Markets

International trade of softwood lumber is on pace to a new record high in 2017 if the trend from the first six months of 2017 continues in the second half of the year. 50 60 70 80 90 100 110 120 US$/odmt Global Wood Fiber Price Indices (SFPI & HFPI) 1Q/88 - 2Q/17 SFPI (softwood fiber) HFPI (hardwood fiber).

Of the ten largest lumber-exporting countries in the world, Russia, Finland, Austria and Ukraine increased shipments the most year-over-year during the first half of 2017. Russia alone, has accounted for 22% of global lumber trade so far in 2017, which is up from 15% ten years ago.

During the first five months of 2017, lumber production in the US South bounced back after having declined during the second half of 2016. The total production output from January through May was 7.3% higher this year as compared to the same period in 2016.

Lumber prices in both the US and Canada have trended upward for almost two years and reached 13-year highs in July.

Prices for lumber prices in the Nordic countries continue to be depressed in US dollar terms, although they have moved up slightly during the 2Q/17. Current price levels are close to the lowest they have been in eight years.

Demand for softwood lumber has picked up in China in 2017 with import volumes during the first seven months being 16% higher than during the same period in 2016. By far, the biggest jump in supply sources has been from Russia.

Global Biomass Markets

Global trade of wood pellets has experienced a dramatic growth with a doubling of shipments to 16 million tons in 2016. There are four countries, the United Kingdom, Denmark, South Korea and Italy, that currently consume almost 80% of the world’s traded pellets.

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