WRI: The Global Forest Industry This Quarter

Global Timber Markets

Sawlog prices fell in most of the major regions of the world in the 2Q/20. A strengthening US dollar, weaker log demand early in the quarter, and sufficient log supply in some markets contributed to the lower prices.

The Global Sawlog Price Index (GSPI) declined four percent q-o-q to its lowest level in over ten years, reports the Wood Resource Quarterly.

The European Sawlog Price Index (ESPI) has fallen 9.1% in the past year. The largest sawlog price decreases have occurred in Central Europe.

Global trade of softwood logs fell by approximately 15% y-o-y during the first half of 2020 as the consumption of lumber dropped throughout the world.

Global Pulpwood Markets

Wood raw-material costs fell for most pulp manufacturers throughout the world in the 2Q/20, which reduced WRI’s two fiber price indices for the fifth consecutive quarter. The Hardwood Fiber Price Index (HFPI) dropped to its lowest level since 2004.

The world’s two largest purchasers of wood chips, China and Japan, drastically reduced their chip importation in the 2Q/20, as the COVID-19 epidemic took its toll on pulp and paper consumption in the two countries.

Global Pulp Markets

Prices for hardwood market pulp (HBSK) have remained practically unchanged during the COVID-19 epidemic, despite short-term increases in demand for tissue and other paper hygiene products.

Prices for softwood pulp (NBSK) have inched up slightly this year from a three- year low in early 2020.

Global Lumber Markets

The good news for lumber producers in North America has been the increased usage of wood products in the repair and remodeling sector.

US softwood lumber prices have risen spectacularly this year. Market prices for commonly traded grades have more than doubled from May to August.

In the 2Q/20, China increased importation of softwood lumber by 42% q-o-q, 3

reaching 7.1 million m . This large increase followed a quarter where import volumes had fallen to a four-year low.

As estimated eight percent of globally traded lumber is shipped to the Middle East/Northern Africa (MENA) region. Following two years of increases, this year saw imports decline.

Record high lumber prices in the US and slightly lower costs for sawlogs moved 2Q/20 gross margins for US sawmills to some of the highest levels seen since 2005.

Global Biomass Markets

Import prices for industrial wood pellets fell q-o-q in the 2Q/20 for the four major markets in Europe, with the largest declines occurring in Denmark and Belgium.

Source: Wood Resources International LLC