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SEATTLE , USA (Commodity Online): Sawlog prices have fallen sharply across the globe on weakening demand for lumber. The global sawlog price index in the 1Q/12 was down almost nine percent from early 2011, with Europe experiencing the biggest decline in prices, reports the Wood Resource Quarterly.

Prices for sawlogs fell in virtually all twenty countries covered by the Wood Resource Quarterly (www.woodprices.com), both in local currencies as well as in US dollars. This resulted in the third consecutive quarterly decline of the Global Sawlog Price Index (GSPI) to US$85.90/m3. The Index was down 3.0 percent from the 4Q/11, and 8.6 percent lower than the all-time high in the 2Q/11. 

Lower demand for lumber in many markets in Europe and reduced log imports to China were two major factors that pushed softwood log prices downward in the first quarter. In US dollar terms, prices fell the most in the Nordic countries, Coastal British Columbia, Poland, Germany and Austria.

The slowdown in Chinese lumber and log demand affected sawlog prices for hemlock on the BC Coast during the winter months, where they dropped 17 percent from the 3Q/11 to the 1Q/12. Prior to the recent slide, there was an almost 50 percent increase in hemlock sawlog prices between 2009 and 2011.

In many European countries, sawlog prices fell during the winter months, according to the WRQ. This was the result of reduced domestic demand for lumber, slowing markets in the Middle East and Northern Africa, and uncertainty over the near-term financial health of the European Union.

Trade of sawlogs fell in early 2012 because of reduced demand in most key lumber producing countries in the world. This downturn comes after four years of consecutive

increases in traded volumes from 2008 to 2011. Of the ten largest softwood log-importing countries, China, Germany and Spain have reduced imports the most so far this year, as compared to early 2011. Only two countries, Japan and South Korea, have increased importation of logs to supply their sawmills and plywood mills with more raw-material. Japanese sawmills have not only increased their supply of imported logs, but are also using more domestic logs.

During the first three months of 2012, log consumption by the country’s sawmills was up seven percent compared to the same period last year. Log consumption is expected to increase slowly in the coming years because demand for lumber and plywood will grow as the country is rebuilt in the aftermath of devastating earthquake and tsunami last year.