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Report: Global forest industry hit hard in Q2, pulp demand down


September 9, 2019
By Wood Resources International LLC

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The global forest industry has had a difficult second quarter with softening prices and excess supply, according to Wood Resource Quarterly’s highlights from its “Global Forest Industry in the 2Q/2019” report.

Global pulpwood prices

  • Prices for softwood pulplogs and wood chips fell in practically all markets around the world in Q2/19 because of a combination of factors. These factors varied by region, but included reduced fibre demand, lower pulp prices, insect-damaged forests and favourable logging conditions.
  • In Q2/19, the Softwood Fiber Price Index (SFPI) fell by 1.5 per cent from the previous quarter.
  • The Hardwood Fiber Price Index (HFPI) was down 0.5 pr cent quarter-over-quarter in Q2/19. Hardwood pulplog prices fell the most in Indonesia, Germany, the US Northwest and Brazil, while prices increased in Russia, Japan and Australia.

Global pulp markets

  • Pulp mills around the world have had to tackle both weak demand and high inventories of pulp during the second quarter of 2019.
  • The prices for NBSK and BHKP market pulp in July were down as much as 26 per cent and 18 per cent respectively, from October of last year.

Global timber markets

  • The Global Sawlog Price Index (GSPI) fell for the fifth consecutive quarter in Q2/19, reaching a two-year low. Log prices were down on all continents, with the biggest declines occurring in Europe.
  • In Q2/19, the European Sawlog Price Index (ESPI) fell to a nine-year low, reports the WRQ. In Euro terms, average sawlog prices in Austria and Germany have fallen almost 20 per cent over the past two years, thus improving the competitiveness of the two countries sawmilling industry.
  • US softwood log shipments to China have fallen by $124 million in value since the trade war started May 2018.

Global lumber markets

  • With unchanged or slightly higher log costs and lower lumber prices in Q2, sawmills in North America saw their profit margins decline again after the short-lived improvements seen in Q1/19.
  • Demand for lumber in China, the UK, Egypt and the Netherlands increased this year despite a slowdown in the global economy.
  • Lumber production in Canada from January to May 2019 was nine per cent lower than it was during the same period in 2018. Most of the decline was in British Columbia, where production was down 16.5 per cent year-over-year.
  • China imported almost eight million m3 of softwood lumber in Q2, a new quarterly high. Russian deliveries reached five million m3, a 39 per cent increase from Q1/19.
  • The increased lumber demand in the MENA region continued in Q1/19 when the two major markets, Egypt and Saudi Arabia, increased their importation by over 50 per cent from Q1/18.

Global biomass markets

  • In 2015, only 80,000 tons were exported to Japan, while an estimated 600,000 tons (24 per cent of all exports) are expected to be shipped to this relatively new market in 2019.
  • Wood fibre costs for US pellet manufacturers fell in Q2, while Canadian pellet producers experienced higher costs due to reduced supply of sawmill residues.

Wood Resource Quarterly (WRQ)’s 56-page report, established in 1988 and with subscribers in over 30 countries, tracks sawlog, pulpwood, lumber & pellet prices, and trade, and wood market developments in most key regions around the world. To learn more about wood markets around the world, please go to www.WoodPrices.com.