Declining costs for sawlogs and pulplogs in Brazil and Chile over the past few years have made the forest industry in the two countries quite competitive. In the 2Q 2013, pulplog prices in both countries were among the lowest in the world and sawlog prices were substantially below the Global Sawlog Price Index GSPI.

Lumber

WRI: Pulp mills and sawmills in Latin America have among the lowest wood costs in the world

Dec 24, 2013. /Lesprom Network/. Declining costs for sawlogs and pulplogs in Brazil and Chile over the past few years have made the forest industry in the two countries quite competitive. In the 2Q 2013, pulplog prices in both countries were among the lowest in the world and sawlog prices were substantially below the Global Sawlog Price Index GSPI, as the Wood Resource Quarterly said in the press release received by Lesprom Network.

The wood costs for pulp and lumber manufacturers in the two largest producing countries in Latin America, Brazil and Chile, have fallen during much of 2012 and 2013, and were in the 2Q 2013 at the lowest levels in over two years. The two countries currently have some of the lowest wood raw-material costs in the world, and since these costs account for 55-65% of the production costs when manufacturing pulp and lumber, it makes the industry quite competitive in the export market.

In Brazil, prices for both sawlogs and pulplogs have come down substantially in US dollar terms the past few years. The average pine sawlog price is currently over 20% below the record high levels reached in 2011. This sharp price decline is more a reflection of a weakening Brazilian Real than any dramatic price changes in the local currency. The current sawlog costs, which were about 30% below the global sawlog index GSPI, makes Brazilian sawmills very competitive. Although Brazil is a minor player in the global lumber export market, the country has expanded sales to the US, which is by far the largest consumer of Brazilian softwood lumber, this year, with shipments in the 3Q 2013 reaching their highest levels in over two years.

Prices for pulpwood in Brazil have followed a similar trend to those of sawlogs, with sharp declines in US dollar terms but only modest declines in the Brazilian Real the past year. Current pulplog price levels have not been seen in almost five years, and the Brazilian pulp industry has become much more competitive compared to a few years ago.

Prices for pine sawlogs in Chile have been surprisingly stable in 2012 and 2013 despite higher log demand from sawmills the past year both because of a stronger domestic market and increased exports. Chile is about the tenth largest exporter of softwood lumber in the world and shipments to China, Japan and the US were all up the first half of 2013 as compared to the same period in 2012.

Pulplog prices in Chile have also fallen, with the 2Q 2013 prices being about 8% lower than in the 2Q 2012. The average cost for Eucalyptus fiber in Chile is currently the lowest in all countries tracked by the WRQ, making the country’s pulp mills some of the world’s lowest cost producers of hardwood market pulp.