Wood Resources International LLC

Wood Costs for the Pulp Industry Have Trended Upward in Most Regions of North America Throughout 2017 and 2018, With the Biggest Increases in British Columbia and US Northwest

SEATTLE, Dec. 26, 2018 /PRNewswire/ --

Pulpmills in five of the nine major pulp-producing regions of North America have seen their wood fiber costs go up over the past year, reports the NAWFR. In the 3Q/18, average market prices for wood chips and pulplogs were highest in Interior BC and US Northwest, while pulpmills in the US South, Quebec, and the Maritime provinces had the lowest wood costs.

Wood fiber costs for pulpmills in North America remained generally unchanged from the 2Q/18 to the 3Q/18 but were higher than in the 3Q/17, according to the latest issue of the North American Wood Fiber Review. The biggest increases year-over-year came in British Columbia and the western US where prices for wood chips (the major fiber source for the two regions' pulp industry) increased by 25% and 23%, respectively.

US South

Prices for hardwood chips and pulplogs in the South Central sub-region were up about five percent quarter-over-quarter in the 3Q/18, while the price increases were more modest in the Southeastern region. Low inventories and reduced harvests of hardwood stands have contributed to record high hardwood chip prices and hardwood pulplog prices being close to their highest levels in two years.  

Softwood chip prices have remained practically unchanged for more than a year throughout the South due to increasing supply of residuals from the region's sawmills. Prices for sawmill chips in both South Central and Southeast are currently among the lowest in North America.   

US Northwest

There was an uptick in the price of Douglas-fir and hardwood pulplogs in the 3Q/18 in coastal Washington and Oregon, with the price for Douglas-fir reaching a high last seen in the 1Q/12. The current price equals the price of hemlock/fir, which was unchanged from the 2Q/18.

There was a noticeable decrease in residual chip prices q-o-q due to multiple factors, including plentiful residual supplies at the region's sawmills, log buyers building sawlog and pulplog inventories because the forests remained opened in spite of the wildfire threat, and more logs becoming available for domestic mills due to US-China trade tensions. The average softwood chip price in the 3Q/18 was up 25% from the same quarter in 2017.