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Global Hardwood Fiber Price Index increased by 27%
Wood chip and pulplog prices rose substantially in most countries over the past year in the local currencies. For example, in the Nordic countries, domestic prices were up about 20% from the 4Q 2021 to the 4Q 2022, and in Central Europe, wood fiber costs increased by 30-50% over the same period. Pulpwood prices in Latin America rose by 25-40%, while wood price in Canada increased slightly less, 15-35%. The US South was the only region where prices have remained practically unchanged over the past year, according to the Wood Resources International (WRI).
In US dollar terms, global wood fiber prices have generally increased less than in local currencies the past year because of the strengthening dollar. Pulpmills have grappled with some of the highest wood costs in over ten years. WRI's two global wood fiber price indices have trended upward for 2.5 years and were at eight-year highs in the 4Q 2022. The GlobalHardwood Fiber Price Index (HFPI) has increased the most over the past few years, from US$78.79/bdmt in the 3Q 2020 to US$100.07/bdmt in the 4Q 2022, a 27% increase. The Global Softwood Fiber Price Index (SFPI) rose during the same period, about 13%, from $93.13/bdmt to reach US$104.79/bdmt in the 4Q 2022.
Wood fiber costs are, by far, the highest cost component when manufacturing wood pulp. In the 4Q 2022, wood costs accounted for almost 60% of the cash cost for pulp produced worldwide, according to FisherSolve from ResourceWise. The other cost shares were energy (17%), chemicals (14%), materials (5%), and labor (5%). There is a significant variation in wood cost percentages depending on the country, ranging between 45-75%.
The Nordic countries and Germany are at the low end of the range for wood costs, with energy accounting for a relatively high percentage. The highest wood cost shares are typically in Asia, including China and Japan, with the energy and chemicals shares often below 10% of total cash costs.