Wood Resources International

Global wood prices surging due to increased competition and higher freight costs

Pressmeddelande   •   Sep 03, 2008 15:59 CEST

Seattle, USA, September 3. Wood fiber prices worldwide have been rising steadily for the past six years, reaching record levels in the 2Q/08. Expanding demand for renewable energy may potentially drive prices even higher in many countries in the near future, according to Håkan Ekström, president of Wood Resources International. Since 2002, global average prices for pulpwood have risen 67% for softwood and 64% for hardwood, in US dollar terms.

To date, most pulpwood has been consumed by the pulp and paper sector, with smaller amounts used to produce wood-based panels such as MDF (medium density fiberboard). The hot new market for wood fiber is that of biomass energy; demand in both Europe and North America is expected to soar over the next five to ten years. With the supply of wood fiber relatively inelastic, at least in the short term, this sudden new demand would normally be expected to push wood prices to unprecedented new heights. However, Ekström points out that the availability and cost of ocean transport may restrict international trade in wood fiber to a great extent. "A lot of new power projects are being developed with the expectation that "waste wood" will be both relatively inexpensive and vessels for transport will be readily available. Both assumptions may prove to be highly optimistic."

Pulpmills in both Europe and the Pacific Rim are increasingly sourcing their mills with wood from fast-growing plantations in the Southern Hemisphere. This has resulted in a major expansion of worldwide trade of both wood chips and pulplogs the past few years. Global trade of wood chips has more than doubled in 20 years, reaching 31 million tons in 2007. Just since 2003, total trade has increased by almost 30%. This development is the result of a tighter wood supply in close proximity to many pulpmills in the Northern Hemisphere, higher costs for locally sourced wood fiber and relatively lower-cost alternatives in new supply regions. The question is... will wood chip trade continue to increase?

Wood Resources International, in cooperation with DANA Ltd and Pike & Co, is organizing a conference with the focus on bringing together plantation forestry owners, woodchip suppliers, transportation experts, and end-users including pulp mills and biomass buyers, in order to answer questions about global wood availability and costs. This meeting, which is the Third International Pulpwood Conference, will be held in Singapore, October 19-21, at the Grand Copthorne Hotel. Due to the "tug-of-war" which is developing between fiber markets in Europe and Asia, some 200-250 delegates from 25 countries are expected to attend the meeting.

For more information on the conference, see www.pulpwoodconference.com. Alternatively, to schedule an interview with Håkan Ekström, please call +1 425-402-8809 or e-mail him at hekstrom@wri-ltd.com.