Home Blogs Hakan Ekstrom The wood chip cost discrepancy

The wood chip cost discrepancy

The wood chip cost discrepancy between pulp mills in Western and Eastern Canada was the lowest it has been in 10 years in the 4Q/10, reports the North American Wood Fiber Review

Over the past 20 years, pulp mills in Eastern Canada have consistently had higher wood fiber costs than the mills in the Western provinces with the exception of a short period in1995, according to the North American Wood Fiber Review. In the 4Q/10,

softwood chip prices had fallen in Quebec and Ontario and increased in British Columbia and Alberta resulting in the smallest cost gap between the two regions in 10 years. Seattle, USA. For most of the past 20 years, pulp mills in Western Canada have had lower wood fiber costs than pulp mills in the Eastern provinces. One year ago, pulp manufacturers in British Columbia paid almost C$60/odmt less for softwood chips than did pulp mills in Ontario and Quebec, and five years ago the difference was almost C$100/odmt, according to the North American Wood Fiber Review. Because wood costs account for almost 50 percent of the production costs for Canadian pulp mills, companies in Eastern Canada have been at a competitive disadvantage to many other mills, not only in other regions of Canada, but throughout North America. Pulp mills in Ontario and Quebec have consistently had some of the highest wood fiber costs in North America. However, prices have fallen lately; softwood chip prices have declined ten percent over the past 12 months and they were 25 percent lower in the 4Q/10than five years ago. Prices are currently the lowest they have been in this region in over ten years. In US dollar terms, wood costs in Eastern Canada are now lower than most countries in Europe, as reported in the Wood Resource Quarterly. In the 3Q, wood chip prices in Western Canada increased again due to their formulaic tie to market pulp prices. However, they did not go up as dramatically on a quarter-by quarter basis as they did from 1Q to 2Q earlier this year. The latest uptick resulted in prices at levels not seen since 2001. Pulp mills in the region currently have some of the highest chip prices in North America. With NBSK pulp prices now beginning their descent; softwood chip prices will follow downward in the coming quarters. Despite a price decline in Eastern Canada and an increase of almost 40 percent in one year in the West, pulp mills in British Columbia continue to have lower wood fiber costs than mills in the eastern provinces of the country.

Biomass and wood chip market updates are included in the 32-page publication North American Wood Fiber Review. The report, established in 1982 and with readers in a large number of forest and energy companies in North America and Europe, tracks wood fiber prices in 15 key markets of the US and Canada.

 

Hakan Ekstrom

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Mr. Håkan Ekström is the principal of Wood Resources International LLC, an internationally recognized consulting firm providing forest market analysis and wood price reporting for the forest industry worldwide.  

He has, for the past 22 years, worked in various capacities relating to wood products utilization, international forest products marketing and global wood supply. His international experience is extensive, including visitation of more than 20 countries to research forest resource issues and to study forest products industry developments on-site.


He is also the editor of the Wood Resource Quarterly and the North American Wood Fiber Review, two reports tracking wood markets and focus on the global and the North American market, respectively. The reports include information about wood costs, wood supply and trade of wood products in all the major regions of the world.

 

Wood Resources International LLC

Track global pulpwood and sawlog prices - subscribe to the Wood Resource Quarterly - read by forest industry analysts in over 25 countries since 1988.

www.woodprices.com

 

 
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