WRI Market Insights: The Global Forest Industry Q1 2021

Global Timber Markets

The strong lumber markets in North America and Europe resulted in higher sawlog prices in most parts of the world in early 2021.

The Global Sawlog Price Index (GSPI) has increased for three consecutive quarters to almost $79/m3 in the 1Q/21. This is substantially higher than its 25-year average.

The European Sawlog Price Index (ESPI) rose to €81.44/m3 in 1Q/21, up 9% from the previous quarter. The most significant price increases from late 2020 occurred in the Baltic States and Eastern Europe.

Global Pulpwood Markets

Both WRI's global fiber price indexes increased for the third consecutive quarter in the 1Q/21. The Softwood Fiber Index (SFPI) was up 1.7% q-o-q driven by higher costs for wood fiber (in US dollars) in the US South, the Nordic countries, Germany, and Oceania.

The Hardwood Fiber Price Index (HFPI) rose 4.6% from its 15-year low in the 2Q/20 to just over $83/odmt in the 1Q/21.

Global Pulp Markets

Tight pulp markets have pushed pulp prices in the 1Q/21 to the second-highest levels in 15 years.

Pulp production in Brazil, the world's second-largest producer of pulp behind the US, reached a quarterly record high of 5.5 million tons in the 1Q/21.

Global Lumber Markets

Lumber prices in the US have taken off to levels where they have never been before. In April of 2021, average prices reached record levels that were more than three times as high as 12 months earlier.

The sawmill industry in both Finland and Sweden has increasingly shipped lumber outside Europe over the past decade. In Finland, this share was up from about 50% in 2010 to reach almost 60% in 2020.

Softwood lumber imports to Japan have been in steady decline for the past five years, and this trend continued in early 2021 when volumes were 14% lower y-o-y.

With lumber prices reaching the stratosphere and costs for sawlogs moving up only marginally, profits for sawmills in North America and Europe were at record highs in the 1Q/21.

Global Biomass Markets

Global trade of wood pellets has increased every year for the past decade with North America being the leading net exporting region.

The forecasted growth in wood pellet production in Europe will increase competition for wood fiber and require new feedstock sources.