The world's thirst for renewable energy continues, and demand for wood pellets—mostly made from sawmill byproducts—is increasing. As a result, the total global wood pellet trade in 2021 was up 9% YoY to 29 million tons, 50% higher than in 2017.
Lumber trade flows changed almost instantly when Russia invaded Ukraine in late February. Trade sanctions and restrictions in financial transactions by Europe, North America, and major markets in Asia halted shipments from Russia and Belarus.
Trade of logs and lumber in Europe will change dramatically in the coming years as timber harvests in Central Europe decline and the sanctions against Russia result in a plunge in forest products imports
Russia’s invasion of Ukraine is likely to impact global trade in the coming months. Increased sanctions against trading with Russia and difficulty with financial transactions will probably interrupt and re-direct shipments of forest products throughout the world.
Wood fiber costs for pulp manufacturers have gone up in practically all countries covered by the WRQ over the past year. In the 3Q/21, the Softwood Fiber Price Index (SFPI) was at its highest level since 2014, 8.1% higher than the 3Q/20.
In 2020, wood pellet production in Europe was up 4% y-o-y and was 34% higher than in 2016, according to data just released by the UNECE. Despite this increase, production has not kept up with consumption, resulting in higher net imports to the continent over the past few years.
Softwood lumber has been in high demand in the US and Europe throughout 2021. The limited supply resulted in temporary price surges to record high levels during the spring, followed by substantial declines in early summer.