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Weak Lumber Markets Drive Global Sawlog Prices Down 10% from 2022

Weak Lumber Markets Drive Global Sawlog Prices Down 10% from 2022

The Global Sawlog Prices Index (GSPI), a benchmark for worldwide wood pricing, has dipped about 10% from its all-time high in 2022. According to ResourceWise data, most countries experienced a drop in prices over the last year. However, some countries have actually seen rising costs in the preceding 12 months.

Multiple factors are at play in why we’re seeing these ups and downs. This post will examine a few of the major global forestry regions to better understand why this may be the case.

Western North America Faces Multiple Challenges

Pacific sawmill regions, most notably in British Columbia, have continued feeling the pinch of market shifts. Several mills have already closed, and more pulp mills will likely follow suit in the region.

As explained by Ted Clarke of the Prince Georgia Citizen, BC has seen a series of challenges that many companies could not overcome. A pine beetle infestation devastated BC forestlands and left a huge deficit in available harvests. This led to an excess of mills without enough supply to go around—a big problem for any operation.

Additionally, increasing risks from wildfires have left some investors worried about opening new facilities or even continuing to operate current ones. With 2023’s record-setting wildfire destruction, it’s no surprise most companies would feel that way.

Related: What Can We Learn from a Record-Setting 2023 Canadian Wildfire Season?

According to Wood Resources International, a ResourceWise company, former PNW operations have shifted gears and moved down to the US south. An ample supply of trees and favorable market conditions make it a highly attractive area to these companies.

US South Sawlog and Lumber Prices See Ongoing Drops

The price for sawlogs across the US south saw some slight increases in 2022. By the quarter of 2023, however, they had also fallen around 8% year-over-year. In nominal terms, this amount was the lowest the region has experienced in 25 years.

This price drop extends beyond sawlogs and into processed wood as well. Our data shows SYP KD lumber prices continuing to fall after hitting a 2023 low in August. Since that report, these costs have dropped even more.

Dips in manufacturing and industrial production demand contributed to this drop. Additionally, fears of recession have loomed for several months as economic indicators showed the economy contracting earlier this quarter.

Related: The Verdict’s Out: We’re in the Starting Phases of a Recession

Europe: Finland and Sweden Adjust After Russian Export Disruptions

Northern Europe’s wood markets have also felt the effects of geopolitical unrest. Russian log imports were cut off to Finland in the wake of Russia’s Ukraine invasion in 2022. Relative to other European prices, this caused a 10% jump in prices.

Russian sawlogs were an important piece of the puzzle in overall European lumber stocks. Losing this country’s resources (and others like Ukraine and Belarus) tightened up stock and demand across major wood-producing countries.

Related: Finland Forestry: Falling Market, Russian Ban Change Up Industry

Countries like Sweden compensated for this loss by seeking out sawlog imports from other countries such as Latvia and Estonia. Of course, the higher costs of imports from these countries mean a jump in prices. Wood Resources International reports a 60% price increase for Swedish sawmills between the pre-Russia invasion in 2022 to the first 6 months of 2023.

Latin America: Brazil Pushes Upward in Global Wood Market, Sees 200% Sawlog Price Increase

In Brazil, the largest producer of global sawlogs, prices have also continued to rise. Data from ResourceWise’s online cost tracking platform WoodMarket Prices shows an over 200% increase in Brazilian sawlog prices between the start of 2021 and Q2 2023.

Softwood sawlog prices in Brazil, Q1 2021 to Q2 2023.

Brazil’s forestry industry continues to push the country into a broader global position. Accordingly, demand for various wood products has surged, showing impressive growth against waning markets like Canada.

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As environmental and geopolitical factors influence sawlog and wood product pricing, understanding how the market moves is essential. Stick with ResourceWise for ongoing updates surrounding news and trends impacting your business.

Want to learn more about the global sawlog market and the influences that impact these prices?

Download our Global Sawlog Market Insights report from Wood Resources International. 

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