Global Timber and Wood Products Market Update

August 7, 2019

By: The Working Forest Staff

With tightening supply of hardwood fiber in the Pacific Rim, prices for

hardwood chips exported from Latin America were up 15% in the 1Q/19

from their eight year-low in late 2017, reports the WRQ

Tight supply of hardwood fiber in the Pacific Rim have pushed prices for Latin American

hardwood chips upward during the first half of 2019, reports the WRQ. However, a decline

in chip consumption in China is expected to occur in the second half of the year, which

would likely end the most recent price rally that started in mid-2018.

 

Seattle, USA. Export prices for hardwood chips jumped for all three exporting countries

in Latin America in the 1Q/19. The biggest increases were for chips shipped from Chile

and Uruguay, which were up over 10% from the 4Q/18. Prices for chips exported from

Brazil were up six percent quarter-over-quarter. For Brazil and Chile, both countries that

are selling all their export volume to Asia, current price levels were below their ten-year

averages in early 2019 (see chart in the latest WRQ).

The hardwood chip price index for Latin America, which trended downward during much

of 2012 to 2017, has increased quarter-over-quarter for four of the past five quarters and

was up 15% in the 1Q/19 from its eight-year low in the 4Q/17.

Hardwood chip prices increased during the first half of 2019 but may have reached a peak

in the second quarter and could potentially even decline in the second half of the year

because of reduced demand for wood fiber in China. Longer-term, prices for hardwood

fiber will likely trend upward again because of an expected tightening of the current sources

for hardwood chips in the Pacific Rim. Despite this, it is uncertain if higher prices will

make much difference for chip suppliers in Latin America when domestic demand

increases with new pulp capacity coming on-line, and local chip prices match those of the

export market. Chile’s and Uruguay’s participation in the export market may be declining

in the coming years.

The trade of wood chips in the Pacific Rim in the 1Q/19 remained practically unchanged

from the previous quarter, with increases in imports to Japan balancing out decreases in

imports to China, reports the WRQ (Note. see the WRQ Trade Snapshot for imports during

the first five months of 2019). Year-over-year, imports of softwood and hardwood chips to

Japan, China, Taiwan, and South Korea have fallen five percent due to a slowing pulp

production.

All of the major supplying countries to the Pacific Rim reduced shipments in the 1Q/19

with the exception of Thailand (+44%) and South Africa (+47%). The biggest declines in

the past year have been seen in exports from Australia (-19%), Brazil (-19%) and Chile (-

14%). In the 1Q/19, hardwood chips from Latin America accounted for 17% of the total

trade to the region, a share that was down two percent from the 1Q/18.

 

Global lumber, sawlog, and pulpwood market reporting are included in the 56-page

quarterly publication, the Wood Resource Quarterly.

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