Eucalyptus log prices in Brazil jumped 25%
Eucalyptus pulp log prices in Brazil have been very stable in the local currency and they have hardly changed at all since 2006, as reported in the Wood Resource Quarterly. In US dollar terms, on the other hand, wood fibre costs have increased substantially because of the strengthening of the Brazilian Real.
Five years ago, Brazil had some of the lowest wood fibre costs in the world in US dollar terms, but since that time the Real has appreciated against the dollar with the result that costs for pulpwood traded in the open market in Brazil now are close to the global average hardwood fibre price index (HFPI). Eucalyptus fibre prices in the 1Q/10 were about 25% higher in US dollar terms than the same quarter last year, and 60 percent higher than five years ago.
Demand for Eucalyptus logs has increased in some regions of Brazil not only from pulp and panel manufacturers, but also from some sawmills that are producing lumber from both pine and Eucalyptus for the construction market. The increased demand for logs has not changed stumpage prices much in the local currency, and it is not expected that they will increase much in the coming years because of the additional supply of wood that will be available from recently established plantations.
During the past five years, the area of Eucalyptus plantations has expanded by over seven percent annually. The pulp industry consumes about 45% of harvested Eucalyptus logs, while an estimated 48% is used for fuel wood and for making charcoal for the steel industry. A growing, but still small consumer of Eucalyptus is the sawmilling sector that last year used approximately four percent of the total harvest of logs.
There is still not much interest in utilizing Eucalyptus fibre for the manufacturing of wood pellets in Brazil, neither for domestic nor for export markets. Investments in pellet plants have been limited and are not likely to grow unless prices for wood pellets in the major export markets in Europe improves.
Source: Wood Resources International LLC, http://www.woodprices.com/