Wood Fiber Costs for U.S. Pulp Mills Decreased During 2016 and Early 2017
(Seattle, USA, July 10, 2017) “Volatile” could best describe many of the North American regional market conditions in the first quarter of 2017! The volatility came in many different areas; adverse weather events, operation breakdowns, plant explosions, and idling, as well as uncertainties over looming trade policy decisions, according to the North American Wood Fiber Review (NAWFR) published by Wood Resources International. Wood flows across Canada and the U.S. northern tier of states as well as through the Pacific Northwest were impacted by weather — either too much snow (leading to transportation difficulties), or mild temperatures followed by early breakup.
The declining price trend for chips and pulp logs in the Northwest that occurred during 2015 and 2016 came to a halt in early 2017 because of uncertainty about fiber availability as a result of slowdowns in harvest operations. Over the past two years, fiber costs have declined by 13% in the Northwest and pulp mills in the region have become more competitive. In the 1Q/17, pulp mills had only slightly higher wood fiber costs than pulp mills in the historically low-cost US South. Pulp mills in the Lake States and the Northeastern states continue to have the highest wood costs in the US. Wood fiber costs for pulp mills in the US South have also fallen over the past year, with average softwood pulp log prices being five percent lower in the 1Q/17 than in the 2Q/16.
Prices for both softwood and hardwood pulp logs have slowly declined over the past four quarters to reach their lowest levels in three years. With several planned pulp mill maintenance outages anticipated in the 2Q/17, fiber demand will remain muted in the coming months.
Increased lumber production across the South will continue to generate additional volumes of residual chips resulting in downward price pressure on both chips and pulp logs in late spring and summer.
For further information visit: www.woodprices.com (Source: Wood Resources International LLC)