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The Final Word by Chuck Swann
Pulpwood costs have fallen substantially worldwide, with both softwood and hardwood pulpwood prices at the end of 2015 at their lowest levels in more than 10 years, according to our friends at Wood Resource Quarterly. At the same time, global trading in softwood lumber reached a 10-year high in 2015.

Hardwood fiber prices continued to fall in the last quarter of 2015, with the biggest declines in Brazil, Chile, Russia, France, Germany and Indonesia. Thanks to the weakness of the ruble, Russian pulp mills have substantially lower wood fiber costs than most competitors around the world. Russian prices for hardwood pulp logs were less than half the average prices in Brazil and Chile in 4Q/15. In US dollar terms, current price levels are about half of what they were two years ago. Pulp log prices throughout Europe have fallen during the last few years, but still remain among the highest in the world. With the exception of the US South and New Zealand, softwood fiber prices were also down globally in 4Q/15.

Most of the largest softwood lumber-consuming countries in the world increased their imports of lumber in 2015, pushing the trading level to its 10-year high. Compared to most other regions of the world, the US lumber market was markedly up almost 5.0%, largely due to the resurgence of the market for new homes. Canadian lumber producers took advantage of the stronger US lumber market in 2015 and shipped 9.2% more lumber into the US than in 2014.

But weaker markets in Asia resulted in almost 10% less lumber being exported by US producers in 2015. The American Forest & Paper Association has raised its voice in the effort to stimulate support for the Trans-Pacific Partnership trade agreement now pending before the US Congress. It is expected that the agreement would boost US trade with Asia. Said AF&PA president Donna Harman, "AF&PA supports the TPP and urges Congress and the administration to resolve any remaining issues so that the agreement can be approved this year. The TPP agreement opens new markets for US forest products and breaks new ground in lowering non-tariff barriers and other regulatory impediments to trade. The elimination of most tariffs on goods traded in the TPP region is expected to increase economic activity across the region and boost demand for paper and wood products, especially packaging materials."

Stay tuned!

Chuck Swann is the senior editor of Paperitalo Publications. He can be reached by email at chuck.swann@taii.com.

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