Pulp manufacturers in many countries saw their wood fiber costs go up during 2017, with the biggest increases occurring in western North America, Europe, Russia and Australia, according to the Wood Resource Quarterly (WRQ) assembled by Wood Resources International LLC, Seattle. The Global Softwood Fiber Price Index (SFPI) increased for the third consecutive quarter to reach $89.08 per oven dry metric ton (odmt) in the fourth quarter of 2017, 4.0 percent higher than in the same quarter in 2016.
Hardwood fiber prices also trended upwards over the past year, with the Global Hardwood Fiber Price Index (HFPI) reaching its highest level in almost three years during the fourth quarter of 2017. In U.S. dollar terms, hardwood fiber prices went up the most in Europe, Russia and Indonesia during 2017. The only region that experienced a decline in wood fiber costs was the U.S. South, where hardwood pulp log prices were 2.3 percent lower in the fourth quarter of 2017 than a year previous.
Wood fiber costs remain the single largest cost component in the manufacturing of wood pulp, ranging between 40 to 60 percent of the total cash costs, depending on region and pulp grade. The wood fiber costs as a percentage of the price of Northern Bleached Softwood Kraft market pulp (NBSK) have been on a downward trajectory over the past eight years.
The substantial increases in market pulp prices during the fourth quarter of 2017 and only small upward price adjustments of pulpwood resulted in the wood fiber cost percentage reaching a record low of 23.2 percent in the last quarter of 2017 (down from 36 percent in 2012). Since wood fiber costs account for a majority of the pulp manufacturing costs, the low wood cost share has improved profitability for market pulp manufacturers throughout the world.