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Hakan Ekstrom
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Mr. Ekstrom is the President of Wood Resources International LLC . The company is an internationally recognized forest industry consulting firm established in 1987, which publishes two quarterly timber price reports and have readers in over 25 countries. The Wood Resource Quarterly, established... More
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  • Log Prices In Western US Fell In 2014 Because Decreasing Log Exports To Asia

    For many years, the sawlog market in Western US has been impacted by the demand for logs and lumber in Asia. With the constant increase in log exports, domestic sawlog prices have more than doubled over the past five years, reports the Wood Resource Quarterly. However, from the 1Q to 3Q in 2014, this upward trend was broken as log prices fell almost ten percent because of a weakening log export market.

    There has been a constant upward pressure on domestic sawlog prices in the US Northwest for the past five years as a result of an increase in the exportation of sawlogs and softwood lumber to Asia. In just over four years, log export volumes to China, Japan and South Korea have almost doubled to reach close to an all-time high of 2.5 million m3 in the 2Q/14. As a consequence of the higher demand for logs from the export market, average prices for sawlogs at local sawmills have more than doubled from early 2009 to the 2Q/14.

    In the 3Q/14, US export volumes to Asia were down by almost 25% from the 2Q/14, with Chinese shipments down by over 32% to their lowest quarterly volumes since the 1Q/13. The total volume shipped to Asia in the 3Q was at its lowest level in over two years. The two major factors influencing the decline in log shipments from the US to China are decreased demand for wood from the housing sector and high log inventories within China itself.

    The weaker demand for logs in the export market has resulted in lower log export prices during the summer and fall. The average export value reached an all-time high in the first quarter this year and has since fallen over six percent. The slowdown in the log export shipments has been welcome news for sawmills on the US west coast.

    Prices for Douglas-fir sawlogs in the 3Q/14 were down nine percent from their eight-year high in the 1Q/14. Despite the recent decline, current price levels in the Northwest are still 13-25% higher than the ten-year price averages, depending on species and sub-region. Interestingly, the price decline that was experienced in 2014 may be short-lived. There are reports that both domestic and export log prices stopped falling during the 4Q, mainly as a result of higher production levels at the region's sawmills.

    Feb 28 6:47 PM | Link | Comment!
  • The Wood Fiber Costs For The World's Hardwood Pulp-Producing Mills Have Declined In 2014

    Reduced pulpwood prices in Sweden, Russia, Brazil and Australia in the 3Q/14 resulted in the lowest Hardwood Fiber Price Index (HFPI) since 2009, according to the Wood Resource Quarterly. With mixed price trends for softwood fiber, the Softwood Fiber Price Index (OTCPK:SFPI) has been fairly stable the past two years.

    The costs of hardwood fiber for the manufacturing of pulp have trended downward for over three years. The global Hardwood Fiber Price Index (HFPI), which tracks prices for pulplogs and wood chips in 14 regions around the world, reached its lowest level since 2009 in the 3Q/14 when it fell to $96.76 per oven-dry metric ton (odmt). The biggest declines in prices from the 2Q/14 occurred in Sweden, Russia, Brazil and Australia mainly as the result of a stronger US dollar.

    The HFPI index has trended downward for over three years when the all-time high of $117.90/odmt was reached. The largest consumption of hardwood fiber in the world is in Brazil where the pulp production has been on an upward trend for over two decades.

    Despite the continued increase in pulp production and the accompanying rise in wood fiber consumption, prices for Eucalyptus logs have not changed much in Brazilian Real terms, according to the Wood Resource Quarterly (WRQ). In US dollar terms the picture is somewhat different, with prices having fallen as the Brazilian Real has depreciated.

    The Softwood Fiber Price Index (OTCPK:SFPI), which tracks global prices of softwood chips and pulplogs, has been fairly steady over the past two years, fluctuating between $98-100/odmt. The major changes in softwood prices in 2014 occurred in sawmill residuals in Western US and Western Canada where prices increased, and in Germany and Brazil where prices have fallen this year.

    In Western Canada, chip prices have gone up mainly because of higher prices for softwood market pulp (NBSK), to which they often are linked, while recent price increases in Western US have been driven by a rise in the volume of exported chips to Japan.

    Although wood raw-material costs for the Russian forest industry have not changed much in Ruble terms, the costs in US dollars for pulplogs have fallen dramatically from the 2Q to the 3Q this year because of the weakening Russian currency. Pulpwood prices have come down to levels not seen in more than six years. Currently, both softwood and hardwood pulplog prices are lower in Russia than in any of the 17 other regions covered by the WRQ.

    Dec 19 12:16 PM | Link | Comment!
  • Sawlog Prices Fell Worldwide In The 3Q With The Biggest Declines Seen In Europe

    The Global Sawlog Price Index (OTCPK:GSPI), an index based on sawlog prices in 20 key regions around the world, fell 4.6% in the 3Q/14. The major factors for the reduced sawlog prices were the strengthening of the US dollar and weaker demand for lumber in some countries, according to the Wood Resource Quarterly. The biggest price declines occurred in Russia, Western Canada, Sweden and the Czech Republic.

    Sawlog prices were lower in the 3Q in most of the 20 regions that are the basis for the Global Sawlog Price Index (OTCPK:GSPI). The Index fell by 4.6% from the 2Q to

    $85.56/m3, with the biggest price drops occurring in the Nordic countries and Eastern Europe. The decline came after three consecutive quarters of increases and the GSPI reaching a three-year high in the 2Q/14.

    Sawlog prices fell in both the local currencies and in US dollar terms, as the dollar was strengthening against most currencies during the third quarter. In US dollar terms there were some countries where prices fell quite substantially quarter-over-quarter, including Russia (-14%), Western Canada (-10%), Sweden (-9%), the Czech Republic (-9%) and Brazil (-9%).

    In addition to the stronger US dollar, there was also a slightly weaker demand for lumber in Japan, the US, Canada and several other major markets in Western Europe, resulting in downward price pressure on sawlogs in the third quarter.

    With a few exceptions, current sawlog prices are between 5-15% higher than the 10-year averages. Eastern and Central Europe are currently the regions with the highest current log costs as compared to the average costs for the past decade. In the Nordic countries, the trend has been the reverse, with recent prices being below the ten-year averages.

    In Western US, weaker demand for logs in the export market has resulted in lower log export prices during the summer and fall, which was welcome news for domestic consumers of sawlogs. Prices for sawlogs have come down nine percent from their eight-year high early in 2014. Despite the recent decline, current price levels are still 15-20% higher than the ten-year price averages, according to the WRQ.

    In the US South, sawlog prices have been fairly stable for over five years and sawmills in this region have some of the lowest wood raw-material costs in all of North America.

    Dec 19 12:13 PM | Link | Comment!
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