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Hardwood Fiber Prices Spike to 10-Year High as 2023 Finishes

Picture of ResourceWise ResourceWise : Dec 20, '23

Sustainability Forest Products Global Wood Fiber Markets Wood Prices

Hardwood Fiber Prices Spike to 10-Year High as 2023 Finishes

Big movements in the global wood fiber market have led to some significant changes over the last three years. Various economic tensions, conflicts and sociopolitical strife have left lasting impacts on most major wood markets. Combined with the upheaval from the pandemic, market movement continued to surprise investors and forecasters alike.

As 2023 comes to an end, where have hardwood and softwood fiber prices landed? What can we expect for price trends in 2024?

Hardwood Fiber Market Hits 10-Year High

Hardwood markets appear to be somewhat paradoxical in current pricing. ResourceWise has tracked hardwood pulp prices throughout 2023, and we’ve seen a slow-but-steady global decline. This comes alongside a decrease in supply—which usually triggers an increase in price.

Russia’s ongoing war against Ukraine is primarily to blame for the decreased supply. Coupled with some global market factors like China’s economic decline, it appears the lower stock was tolerated within the market.

However, this was not the case within the global hardwood fiber markets. The negative effects of the Russian war had a serious impact on hardwood fiber prices across 2023. We’ve seen an outpacing of hardwood fiber compared to softwood, surging the Hardwood Fiber Price Index (HFPI) 44% over the last three years.

Hardwood Fiber Price Index (HFPI), 2021 to YTD 2023.

Into the third quarter, the HFPI has hit a level not seen in ten years. We’ve seen the outcomes of this increase across all major global wood markets.

Softwood Fiber Prices Drop Sharply After All-Time High in Q2 2023

Meanwhile, softwood fiber prices are headed downward as 2023 finishes. Between the second and third quarters this year, we tracked a 4.5% decline in the Softwood Fiber Price Index (SFPI) numbers. A decline of this size quarter-to-quarter has not been recorded since 2015.

Softwood Fiber Price Index, 2021 to 2023.

Despite the quarter-over-quarter drop, the overall index is still up compared to this time in 2022. The drop was especially poignant considering the SFPI hit its all-time high during the second quarter of this year.

Most major wood market areas have experienced the fallout in softwood fiber price levels, including North America, several European countries, Australia and Chile in South America.

What to Expect in Global Wood Fiber, Other Wood Products for 2024

Wood fiber, chips and other forest products will continue gaining traction as the world further focuses on a renewable future. As many organizations transition to low or zero-carbon emissions, alternative feedstock sources will become increasingly important. And one of the fastest growing feedstock areas comes in way of forest products.

Products such as biochar and torrefied wood pellets bring immense potential as biofuel sources. Increasing demand for these fuels will, in turn, drive demand even further in the global wood products industry.

Related: Biochar: Huge Potential in Biofuels and Renewable Energy

Related: Torrefied Black Pellets: A Key Player in the Carbon Transition

Additionally, disruptions in various global supply chains have also shifted expectations and projections for the market. For instance, the record-setting Canadian wildfire season has left a large amount of uncertainty in its wake. Additionally, the pine beetle infestation in western Canada caused even more destruction of lumber supply.

Combined, these developments have left Canada unable to cover US demand—something its market has historically tolerated.

Related: Canada’s Dwindling Lumber Supply Can't Cover US Demand

Similar global economic events, such as Russia’s continued export ban, will leave wood fiber and other markets up in the air. Make sure to check back on the blog for further updates as we enter into 2024.