Sawlog costs, the largest cost component when manufacturing lumber, have gone up much
more slowly than lumber prices
in many countries
during the past year, resulting in
substantial increases in earnings for the international lumber industry
,
according to the
W
RQ
.
Lumber prices in the US have
experienced
a spectacular surge
in
2017 and
the first half of 2018. By the end of the 2Q
/18, the
benchmark lumber
price index reported
by the market report
Random Lengths
reached its
highest level
in at least 30 years
.
From
January 2017 to June 2018, average prices for commonly traded lumber in the US increased
by
40%.
During the same period, sawlog prices were practically unchanged in the US South
and rose
about 28% in Western US, res
ulting in higher gross margins
in 2018
for sawmills
in both regions
.
Similar
development
s
ha
ve
occurred in Canada
,
leading to record
high
profitability for
many of
the country’s sawmills
thanks to the high lumber prices in the US
.
Wood costs are by far the largest and most important cost component when manufacturing
softwood lumber
and
are
often
the factor that determines a lumber company’s
competitiveness.
The Wood Resource Quarterly
(W
RQ)
has tracked
quarterly
sawlog
prices worldwide since 1995
. Th
is publication also discusses
quarterly sawmill
gross
margins for key
lumber
-
producing
regions around the world
.
In
its
latest issue, quarterly
sawlog costs, lumber prices and gross margins for sawmills in eight key regions worldwide
are reported for the period 1Q/05 to 2Q/18.
The gross margin is defined as the net wood
costs (sawlog costs
minus
the income from saw
mill residuals) deducted from lumber
revenues
and
is a reliable indicator of the changing trend
in
profitability
in
a region’s
sawmill sector.
In the 2Q/18, p
rofits for sawmills in North America reached their highest levels
since at
least 2005
,
primarily because lumber prices have risen faster than sawlog prices
. In Europe,
the gross margins in early 201
8 w
ere
close to the highest
they have been
in four years in
the Nordic countries,
while they reached
levels not seen in over a decade in other parts of
the continent.
However, not all countries have
experienc
e
d
positive earning
trend
s
the past few years.
Sawmills in Eastern Russia, New Zealand and Brazil saw their gross margin
s
decline from
2015 to early 2018 as sawlog prices rose faster than lumber prices. I
n
Siberia,
the gross
margin
has fallen
21
% in t
hree
years
with the 2Q/18 level
s being the lowest since 2013.
Most
of the decline has been the result of higher costs for sawlogs for a growing sawmilling
sector in Eastern Russia.
Gl
obal
lumber, sawlog and
pulpwood market reporting is included in th
e 5
6
-
page quarterly
publication
Wood Resource Quarterly (WRQ). The report,
which was
established in 1988 and
has
subscribers in over 30 countries, tracks sawlog, pulpwood,
wood chip,
lumber and pellet
prices, trade and market developments in most key regions a
round the world.
To subscribe to
the WRQ,
please go to www.
W
ood
P
rices.com
Source: Wood Resource Quarterly
|