Hardwood pulp producers around the world are facing higher wood fiber costs and lower pulp prices as the global demand weakened over the past four months.
Wood Resource Quarterly reported that the price index reached a 24-year high in the third quarter of the year at the same time as hardwood pulp prices actually dropped by 26% from June through to October.
With the overall demand for market pulp weakening over the past four months figures for shipments of hardwood pulp show a fall from 1.76 million tons in June to 1.41 million tons during July. August shipments improved slightly to 1.57 million tons, although producers are now factoring in lower demand and reduced pulp production for the next few months.
Hardwood pulp prices are down a massive 26% from June to the early November. Concurrently, wood costs have increased, which has squeezed the profit margins for many producers of hardwood pulp.
The Hardwood Wood Fiber Price Index rose for the fifth quarter in a row, reaching US$117.91/*odmt, an increase of 14% percent since last summer and an all-time high.
The Softwood Wood Fiber Price Index interestingly only dropped by less than one percent to $108.90/odmt, the first decline since the second quarter of 2010. In addition to exchange rate adjustments, wood prices also fell in the local currencies particularly in France, Spain and Russia.
Industry sources say that the Softwood Wood Fiber Price Index has been higher than the Hardwood fiber index for 21 of the last 24 years and it is only over the past three years that HFPI has been sold at a premium.
Based on these statistics and In light of these recent price and cost developments, it seems producers may decide to return to using more softwood pulp in their product mix, both for market pulp and in their integrated pulp and paper facilities.
* Oven dry metric tons
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