By Ron Kotrba
Web exclusive posted Oct. 8, 2008 at 9:58 a.m. CST
After a 13-year record high in wood fiber costs for western U.S. pulp mills just last quarter, prices retreated significantly in the third quarter of 2008 as supplies grew, said Hakan Ekstrom, president and owner of Wood Resources International, which publishes North American Wood Fiber Review. Despite the 13 percent retreat in prices between the second and third quarters, Ekstrom said those prices in the West are still 25 percent higher than they were a year ago.
"Prices started to move up first quarter this year substantially," Ekstrom told. "This was mainly because the pulp mills out here [in the West] were running out of chips – the inventory situation was pretty tough for them – and the saw mills started cutting back production so they delivered less residual chips to the pulp mills. So they were fighting for those volumes and in some cases they had to go further for those volumes, which increased transport costs."
For the most part, the biomass-to-energy sector has had minimal influence on wood supply and pricing, but Ekstrom said moving forward that is likely going to change. "More wood is going in that sector," he said. "The marginal volumes going into the energy sector with be competing with oriented Strand board (OSB) plants, pulp mills and the like, and is increasingly going to be an issue."
After a 13-year record high in wood fiber costs for western U.S. pulp mills just last quarter, prices retreated significantly in the third quarter of 2008 as supplies grew, said Hakan Ekstrom, president and owner of Wood Resources International, which publishes North American Wood Fiber Review. Despite the 13 percent retreat in prices between the second and third quarters, Ekstrom said those prices in the West are still 25 percent higher than they were a year ago.
"Prices started to move up first quarter this year substantially," Ekstrom told. "This was mainly because the pulp mills out here [in the West] were running out of chips – the inventory situation was pretty tough for them – and the saw mills started cutting back production so they delivered less residual chips to the pulp mills. So they were fighting for those volumes and in some cases they had to go further for those volumes, which increased transport costs."
For the most part, the biomass-to-energy sector has had minimal influence on wood supply and pricing, but Ekstrom said moving forward that is likely going to change. "More wood is going in that sector," he said. "The marginal volumes going into the energy sector with be competing with oriented Strand board (OSB) plants, pulp mills and the like, and is increasingly going to be an issue."
The aftermath of this year's intense hurricane season also had an effect on raw material wood supplies to saw and pulp mills in the southern United States. The season's winds and rains put a damper on logging and transport activity during the third quarter – a time when mills generally try to build up winter supplies.
"So far it's been too wet to haul," Ekstrom said. "Between now and through next month they need the weather to be good to try and catch up. A lot depends on the weather." If the weather doesn't cooperate, prices next spring may be higher as a result, Ekstrom said.
The Northeast continues to see record-high hardwood prices – an astounding 45 percent higher than one year ago – as a shortage of loggers and increasing competition for hardwood drive prices up.
"So far it's been too wet to haul," Ekstrom said. "Between now and through next month they need the weather to be good to try and catch up. A lot depends on the weather." If the weather doesn't cooperate, prices next spring may be higher as a result, Ekstrom said.
The Northeast continues to see record-high hardwood prices – an astounding 45 percent higher than one year ago – as a shortage of loggers and increasing competition for hardwood drive prices up.
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