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The Global Forest Industry in the 2Q/2013

Excerpts from the Wood Resource Quarterly publication provide a snapshot of the industry ( Source: Wood Resources International

Global Timber Markets

In the 2Q/13, the Global Sawlog Price Index (GSPI) based on 19 key markets around the world, increased for the fourth consecutive quarter to reach US$86.60/m3. The Index has gone up 5.1% year-over-year, reaching its highest level since the 4Q/11.

Global Pulpwood Prices

Weaker pulp markets and a strengthening US dollar resulted in lower wood fiber
prices in US dollar terms in most of the major markets covered by the WRQ. Over the
past two years, hardwood fiber prices have fallen more than softwood fiber prices.

The Hardwood Wood Fiber Price Index (HFPI) has fallen every quarter for two
years with one exception. In the 2Q/13, the HFPI was US$100.46, which was 3.1% lower than the previous quarter and 14.8% below the all-time high in the 3Q/11. The biggest price declines since the 1Q/13 have occurred in France, Japan, Australia, Russia and Germany.

The Softwood Wood Fiber Price Index (SFPI) was also down in the 2Q/13, but the decline over the past two years has been less dramatic than that of HFPI. In the 2Q/13, the SFPI was US$97.75, down 2.2% from 1Q/13, with the biggest price reductions seen in Norway, Japan, France and Australia.

Global Pulp Markets

Higher demand for pulp added upward pressure on prices of both softwood pulp (NBSK) and hardwood pulp (BHK) during the 2Q/13, with the biggest price increases occurring in the US.

Prices have gone up faster for NBSK, with the price premium over BHK averaging US$40/ton in the 2Q/13 as compared with US$30/ton in the 1Q/13.

Global Lumber Markets

North American lumber production was up 7.5% during the first five months of 2013 as compared with the same period in 2012, with all regions on the continent showing higher production this year.

After the sharp increase in lumber prices in 2012 and early 2013, Douglas-fir and spruce-pine-fir (SPF) prices fell from their 10-year peak of US$230/m3 in January this year to an average of US$170/m3 in June.

Despite falling lumber prices during the 2Q/13, the improved housing market in the US attracted more interest from a number of countries overseas. Imports were up year-over-year from Sweden, Germany, Austria, China and Brazil.

The trend of sawmills in the Nordic countries diversifying their geographical customer base has continued in 2013. During the spring, exportation to the traditional markets in Europe and Egypt fell, and instead, demand for softwood lumber in Asia and the US was higher.

During the past few years, importation of lumber to China has grown at a faster pace than that of log imports, with the share of lumber of the total import value having gone up from 35 % in 2010 to 42 % in the 2Q/13. In fact, wood import volumes have almost tripled in four years.

The number of new wooden houses built in Japan has increased every year since 2009.

Lumber prices in Japan had trended downward during much of 2012 and early 2013 but suddenly turned around late in the 2Q/13, with prices for import lumber reaching the highest levels seen so far in 2013.

Global Biomass Markets

Pellet prices in Germany have increased substantially the past year from an average
of €227/ton in the 2Q/12 to €267/ton in the 2Q/13. In the US South, pellet export volumes to Europe resumed their double-digit growth after a brief pause in the fourth quarter of 2012.