WRI Market Insights 2021: The Global Forest Industry This Quarter

Global Timber Markets

Softwood sawlog prices have gone up in 21 of 22 WRQ regions worldwide in the past year. By far, the most significant increases have occurred throughout Europe and British Columbia.

The Global Sawlog Price Index (GSPI) jumped 10% q-o-q in the 2Q/21. This change was the fifth consecutive quarterly increase and the highest level in seven years.

The rise of sawlog prices in much of Europe has taken the European Sawlog Price 3

Index (ESPI), denoted in Euros, to an all-time high of over €96/m . Global Pulpwood Markets

Softwood fiber costs were generally higher worldwide in the 2Q/21. This resulted in a two-year high for the Softwood Fiber Price Index (SFPI).

The Hardwood Fiber Price Index (HFPI) rose by one percent q-o-q, with the discrepancy between the two indices rising to the widest margin since 2007.

The US South, Eastern Canada, and Spain stand out as the regions where the costs of hardwood pulplogs have gone up the most.

Global Pulp Markets

Global trade of market pulp is on pace to reach a record high in 2021, with China importing almost 30% of globally traded pulp.

Although the first year of the COVID-19 pandemic, 2020, saw a period of stable pulp prices, prices took off towards the end of the year.

Global Lumber Markets

Lumber has been in high demand in the US and Europe throughout 2021. The limited supply resulted in temporary price surges to record high levels during the spring, followed by substantial declines in early summer.

Canadian lumber prices have spiked similarly to US prices, with record highs in May followed by sharp declines during June through August.

Due to the strong US lumber market, Canada and the US reduced lumber exports overseas in the first half of 2021.

Sawmill profits continued to rise in the spring and early summer and reached all- time highs in America and Europe.

In the US South, gross margins fell as lumber prices crashed, but thanks to low sawlog costs, sawmills were still running at profitable levels into the 3Q/21.

Global Biomass Markets

Net imports of pellets to Europe have gone up the past two years as production on the continent has not kept up with consumption.

Over the past five years, the Netherlands and Japan have increased their market shares of globally traded wood pellets substantially.