Higher wood fiber costs for pulpmills worldwide in 2023

Global pulp prices have fallen steadily since late 2022 when they reached record highs. The most significant decline has been for hardwood pulp, traded at a substantial discount to softwood pulp. Global pulp inventories were down during the summer, and there were signs that the market tightened, and pulp producers were starting to see opportunities to move prices upward in the fourth quarter of 2023 following almost 12 months of declining pulp prices.

Despite declines in pulp prices over the past year, wood fiber costs have not experienced the same downward trend. On the contrary, tighter residual supply resulting from lower lumber production has kept wood chip prices high in many markets.

As reported by WoodMarket Prices, softwood chip and pulp log prices in the 2Q2023 were higher than in the 2Q/22 in most regions of North America and Europe. The Global Softwood Fiber Price Index (SFPI) reached its second-highest value since it was established in 1988.

The index comprising wood fiber prices from 17 countries worldwide increased about 12% in one year to over $112/BDMT in the 2Q/23.

Prices in the Nordic countries, France, Germany, and Latin America. The increases in US dollar terms have ranged between 30-130% in the past three years.

Hardwood chip import prices in China and Japan have increased since 2020 but relatively less than in other major global markets, up 20% in China and only 1% in Japan. Despite the modest recent rise in the price of wood fiber in Japan, the country’s pulp mills still have some of the highest-fiber costs in the world.

The most significant y-o-y increases have occurred in Canada, the Nordic countries, Central Europe, and Brazil.

The Global Hardwood Fiber Price Index (HFPI) has also increased substantially in the past few years to reach a ten-year high of about $113/BDMT (bone dry metric ton) in the early summer of 2023—up 44% from 2020 to 2023. The HFPI index is higher than the SFPI index for the first time in four years.

The primary driver of this rapid rise has been substantially higher domestic hardwood pulp log WRI Market Insights is a subscription service from Wood Resources International, a ResourceWise company.