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August 1, 2016

Global hardwood chips prices fall to record low

Global hardwood chips prices fall to record low

The prices for globally traded hardwood chips fell to a record low in May 2016, while softwood chip prices reached the highest level in seven months, according to the latest FOEX Chip Price Indexes.

Global trade of hardwood chips have trended upward for six years and totaled almost 24 million tons in 2015. By far, the two largest wood chip-importing markets are Japan and China, both countries with limited forest resources to supply the pulp industry with sufficient wood fiber.

The general price trend for hardwood chip traded overseas have been downward since late 2011 when the FOEX price index (PIX-HCG) reached a record high of almost $207/odmt. In May of this year this Index was $167.29, representing a 19.1% decline in 4 ½ years. Some of the biggest price declines the past 12 months have been for hardwood chips shipped from Australia to China, from South Africa to Japan, and from Uruguay to Portugal.

The FOEX softwood chip price index (PIX-SCG) has also fallen from a peak almost five years ago, but the price decline has been less dramatic than that of hardwood chips. During 2016, the SCG index has actually increased to reach $165.55/odmt in May, which was the highest level in seven months. The major price increase so far this year has been for softwood chips exported from the US to Turkey. A majority of global softwood chip trade is in Europe, as opposed to the hardwood chip trade, which is concentrated to Asia.

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