Lower prices for pulplogs and wood chips in some major markets, and a strengthening US dollar resulted in lower wood fiber price indices in the 2Q 2013.
Over the past two years, hardwood fiber costs for the pulp industry have declined more than softwood fiber prices. The Hardwood Wood Fiber Price Index (HFPI) has fallen every quarter except one, during this period. In the 2Q 2013, the HFPI was $100.46, which was 3.1 % lower than the previous quarter and 14.8 % below the all-time high in the 3Q 2011. The biggest price declines since the first quarter of 2013 have occurred in France, Japan, Australia, Russia and Germany. Comparing wood fiber costs for the global pulp industry, which typically ranges between 50-70% of the production costs, reveals that since 2011, pulp mills in Japan, Brazil and Spain have seen their fiber costs come down the most of the major hardwood pulp-producing countries in the world.
The Softwood Wood Fiber Price Index (SFPI) was also down in the 2Q 2013, but the decline the past two years has been less dramatic than that of HFPI. In the 2Q 2013, the SFPI was $97.75, down 2.2 % from 1Q 2013, with the biggest price reductions seen in Norway, Japan, France and Australia.
The trend in many regional pulp markets during the 2Q 2013 was for higher market pulp prices and lower wood fiber costs, indicating improved profitability as compared to the previous two quarters since other costs for the manufacturing of wood pulp have not changed substantially the past year. Note that the wood fiber costs is the highest cost component when manufacturing pulp.
The wood costs as a percentage of market pulp prices fell for the third consecutive quarter for all three major pulp grades in the 2Q 2013. The most dramatic decline has been for Eucalyptus pulp (EucBK), with the percentage having plunged from 36 % in the 4Q 2011 to 24.4 % in the 2Q 2013.
