Sharply declining wood costs for pulpmills worldwide

The global pulp and paper industry has continued to reduce production in 2009. The manufacturing of market pulp was 16 percent lower the first two months of 2009 compared to the same period in 2008. As a result of the lower operating rates and declining demand for wood fiber, pulpwood and wood chip costs for the world’s pulp industry continued to slide in the 1Q/09 and the Wrq Global average wood fiber price indices recorded the second sharpest quarterly decline since 1995. The Global average wood fiber price is a volume-weighted average of delivered wood fiber prices for the pulp industry in all 17 regions tracked by the publication Wood resource Quarterly. These regions together account for 85-90 percent of the world’s woodbased pulp production capacity.
During the past two decades, global wood fiber prices have been declining during most of the 1990’s and early 2000, followed by a substantial increase from 2002 to 2008, according to Wood resource quarterly. Wood costs reached record levels in early 2008, but then fell rapidly for 12 months. The recent decline is most likely going to be temporary and global wood costs will slowly increase again later this year or in early 2010.