Global Sawlog prices slump 14.3% during past two years

SEATTLE (Scrap Monster): The global sawlog prices extended their decline during the third quarter of 2016. The prices have dropped significantly over the past two years. As per the latest Wood Resource Quarterly report, the GSPI Sawlog Index has recorded a decline of 14.3% over the past two years. The index is currently over 12% lower than its ten-year average. Also, it has dropped almost 21% when matched with the all-time highs recorded during the second quarter of 2011. The subdued trend prevailed in almost all regions across the world, WRQ noted.

The GSPI Index dropped by over 14% during 3Q ’16 when compared with the corresponding quarter in 2014. It must be noted that the Index had recorded temporary rise during the second quarter of 2016. The Index had surged higher by over 4% in Q2 this year to US$71.18 per cubic metre. The European region reported sharp fall in prices, whereas North American region recorded modest decline in prices. The prices in Europe are currently lower by 20% when matched with 2014 prices. The Central European region countries reported sharpest price decline over the two-year period. The sawlog prices in North America fell by 5%, whereas Latin America and Oceania recorded 14% fall in prices during this period.

According to WRQ, world countries contributed to convergence in regional sawlog prices during 2015 and 2016. The convergence resulted due to higher decline in prices in high-cost regions when matched with low-cost regions. However, this has not led to complete eradication of price discrepancies. There exists price parity between major lumber-producing regions of the world. In fact, the price discrepancies remained higher in 2016 when matched with the discrepancy levels before ten years.

The European Sawlog Price Index (ESPI-€) declined marginally by 0.5% over the previous quarter to €83.40 per cubic meter in Q3 this year. The decline was primarily on account of the reduced lumber demand in certain countries, along with fall in lumber prices in the domestic and export markets.

Compared with the previous quarter, British Colombia, Eastern Canada, Poland and Sweden witnessed biggest price declines. The log costs continued to remain low in most of the major lumber-producing countries during the third quarter of 2016. The relative strength in local currency relative to the US dollar has resulted in higher sawlog prices in many countries including Brazil, Russia, Norway and New Zealand.

An earlier report published by the Wood Resource International (WRI) had noted that many markets around the world have reported increased demand for softwood lumber in 2016, which in turn has resulted in increased global lumber trade. All key lumber importing countries have reported significant rise in imports during the initial three quarters of the year. For instance, Chinese demand for imported softwood lumber during Q2 and Q3 of 2016 has reportedly touched their highest level.

The GSPI Price Index is a volume-weighted price index comprising of average sawlog prices in 20 of the largest sawlog-consuming regions of the world.