Global Timber and Wood Products Market Update

August 29, 2019

By: The Working Forest Staff

Wood fiber costs declined for many North American pulpmills during the

first half of 2019 with the exception of the US South where wood fiber

prices increased to their highest levels in over three years, reports the

North American Wood Fiber Review

 

Healthy production levels at many sawmills in the US, lower prices for pulp, and improved

weather for logging were all factors which resulted in lower wood fiber costs in most

regions throughout Canada and the US in the 2Q/19, reports the North American Wood

Fiber Review. In the US South, hardwood fiber prices continued their long-term upward

trend to reach an all-time high.

 

Seattle, USA. Wood fiber costs fell in most regions of North America during the first six

months of 2019 with the biggest declines being seen in Western Canada and the US

Northwest. Prices for pulplogs and wood chips in the US South bucked the trend, with

softwood fiber moving up to its highest levels in three years and hardwood fiber prices

hitting an all-time-high.

 

US South

Wet weather conditions in the US South continued to restrain harvesting in the 2Q/19.

However, with pulpmill maintenance outages and falling pulp and paper product prices,

demand for wood fiber softened during the quarter. The result was an easing in softwood

pulplog prices from the 1Q/19. Even though hardwood pulplog pricing remained flat, the

region was slowly reducing its reliance on long-distance haul supply sources, as well as

finishing harvesting operations in timber stands that were purchased when rates were

higher than in the 2Q/19.

 

US Northwest

With sawmills in the US Northwest running at only slightly reduced production levels in

the 2Q/19 due to small adjustments of US lumber prices, residual chip supply remained

stable. Residual chip prices dropped mainly as fiber demand diminished due to seasonal

pulpmill maintenance outages. The reduced fiber consumption resulted in most pulpmills

being able to build their fiber inventories going into the second half of the year. According

to the North American Wood Fiber Review, most sub-regions of the Northwest saw

pulplog and residue prices decline in the 2Q/19 to reach their lowest levels since early 2018.

 

US Lake States

As winter weather of snow and freezing rain continued longer into the 2Q/19 than usual,

more pressure was placed on fiber buyers and their inventories. Some pulpmills reported

having adequate volumes, while a few others struggled with insufficient wood supply,

especially of hardwood fiber. The result was that the price for hardwood pulplogs increased

nearly 4% between the 2Q/18 and the 2Q/19, reaching its highest price seen since early

  1. The pricing for softwood pulplogs remained unchanged from the 1Q/19.

US Northeast

As is customary in the US Northeast, the arrival of spring meant that logging contractors

had to contend with muddy harvesting conditions, which prevented much fiber moving

from the woods to the logging yards. Softwood fiber prices remained stable during the

2Q/19. In contrast, hardwood pulplogs edged upward to levels not seen since the 2Q/16.

This price increase was due to the higher cost of reloading the pulplogs stored at the satellite

yards.

 

Canada West

In British Columbia, the average price for pulplogs fell slightly to C$51/m3 in the 2Q/19.

In the Interior of the province, pulplog prices were steady because pulpmills made a push

early in the year to build up their inventories before the spring breakup. There was also

slower production at several pulpmills due to lower NBSK prices. In the Southwest Coastal

Region, there were no significant supply or price fluctuations.

Of the three regions in Western Canada, residual chip prices in the Interior of BC saw the

steepest decline in the 2Q/19, six percent q-o-q, as a result of the NBSK pulp prices having

slipped (see more in the latest NAWFR). Chip prices in Coastal BC fell just over two

percent, and they were down four percent in Alberta.

 

Canada East

In Eastern Ontario and Quebec, weather-dependent harvesting challenges during the winter

months due to the weather resulted in mediocre hardwood log inventory levels in the 2Q/19.

This caused the prices for hardwood pulplogs to edge upward to levels last seen in early

  1. There was no movement in the price for residual chips in the 2Q/19. However, the

opening of two new pellet mills during the second half of the year is expected to upset the

current supply and demand balance and could therefore change chip prices late in 2019 or

early 2020. In the Maritime provinces, mill and pulpmill inventories remained stable during the spring thaw. Sawmills were not running hard, so the demand for sawlogs was tepid. The price for softwood pulplogs remained flat in the 2Q/19, while the price for hardwood pulplogs rose

by two dollars per odmt. This price increase was primarily due to higher handling costs of

moving the pulplogs from auxiliary wood yards, as well as in some cases temporary

bonuses.

To learn more about the NAWFR, please go to www.WoodPrices.com

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