Status of Global Forest Industry: Q3 2022

Performance across 2022 has thus far seen global impacts from the ongoing Russia-Ukraine war. Demand instability continues to affect all major areas of the lumber market.

Global Timber Markets

A halt in Russian log exports and reduced wood demand in China contributed to a 20% decline in international softwood log trade in the first half of 2022.

Sawlog prices increased worldwide in 2Q/22, except for Oceania and Northern Europe. The increase extended the upward price trend that started in early 2020. As a result, the Global Sawlog Price Index (GSPI), representing 20 regions worldwide, has increased 34% in two years.

Global Wood Fiber Markets

Tight wood fiber supply, low pulp inventories, and record high market pulp prices have pushed the costs for pulplogs and wood chips up over the past year.

The global Hardwood Fiber Price Index (HFPI) jumped 5.3% quarter-over-quarter in 2Q/22 and was 13% higher than a year ago. The global Softwood Fiber Price Index (SFPI) has gone up relatively less (+7%) since 2Q/21.

Global Pulp Markets

Prices for all the primary pulp grades reached new highs in 2Q/22. The substantial increases in pulp prices, paired with only modest increases in wood fiber costs, have resulted in record gross margins for pulp companies worldwide.

Global trade of market pulp fell slightly during the first half of 2022. This was driven by lower demand in China, Germany, and Italy.

The United States stood out as the only market with substantial importation expansion mostly because of continued strong demand for a variety of paper products.

Global Lumber Markets

Global trade of softwood lumber fell about 10% in the first half of 2022. Most of the decline was driven by lower lumber demand in China, the US, and Germany.

Lumber prices in Canada and the US fell by about 50% from March to July 2022. However, these numbers were still close to their five-year averages.

The international boycott of Russian forest products created much uncertainty in the European lumber market. Also, lumber prices softened in early summer.

Lumber imports to China fell 44% during 2020-21. Shipments are on pace to reach their lowest levels in ten years in 2022.

Sawmills worldwide can look back on a few years with historically high profits due to record-high lumber prices and limited increases in wood raw-material costs. According to Wood Resource Quarterly, current profit levels are the highest in at least 25 years.

Global Biomass Markets

Russia's war in Ukraine has shaken up the European pellet market.

Pre-war shipments from Belarus, Russia, and Ukraine totaled about 3.5 million tons in 2021, about 30% of total imports to the continent. However, in the second half of 2022, this trade is likely to come to a halt.

The tumultuous energy market in Europe brought wood pellet prices in the second and third quarters to extremely high levels never seen before.

This is a preview post of our Market Insights report from Wood Resources International (WRI). For the past 13 years, Wood Resources International has distributed Market Insights on a regular basis to over 8,000 forest industry executives, analysts, investors, consultants and journalists worldwide. These Market Insights have covered the most recent developments in regard to global wood supply, forest industry production, forest products trade, and pricing of sawlogs, pulpwood, wood chips, lumber and biomass.

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