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Softwood Fiber Price Index Surged 6.4% to Hit 4-Year Highs

The global wood fiber price indices by Wood Resources International LLC reached four-year highs in Q4 2018. Meantime, the costs for wood chips and pulp logs surged higher during the quarter, reports the latest Wood Resources Quarterly (WRQ) report.

The wood fiber costs have witnessed significant increase during the past several years at pulp mills in Western North America, Europe, Indonesia and China. On the contrary, pulp mills in Brazil and Eastern Canada have reported decline in wood costs. The wood fiber costs averages between 45% and 70% of the cash costs for pulp production around the world.

The costs for wood chips and pulp logs surged higher in 2018, as compared with 2017. When compared with Q4 ’16, the Softwood Fiber Price Index (SFPI) were up by 6.4% in Q4 ’18. Over the period, the Hardwood Fiber Price Index (HFPI) too was up by 4.6%. Incidentally, both SFPI and HFPI touched their highest levels in four years during the quarter.

According to WRQ, softwood fiber prices soared by almost 20% over the past two years in the US Northwest, Western Canada, the Nordic countries and Germany. Meantime, oversupply of wood chips led to softening of fiber costs in Eastern Canada. Brazil too reported fall in fiber costs, mainly due to ongoing weakness in Brazilian Real. The demand for wood fiber stagnated in Ontario and Quebec. The wood chip prices have almost halved in six years.

The fiber costs at mills in countries including China, Finland, Indonesia and Spain have gone higher by 10% to 30% over the period from Q4 ’16 to Q4 ’18.