Finished product markets across the Lake States were somewhat mixed throughout the first quarter of 2013. Though the printing paper business experienced some economic challenges due to weak demand, the packaging side of the business continued to do well economically. The specialty papers business, which does not face competition from electronic sources, remained strong. In fact, private equity firm KPS Capital Partners announced plans to merge mills it purchased from Thilmany and Wausau Paper to serve this market.
Consistently favorable logging conditions across the Lake States over the past year have contributed to healthy pulpwood and chip inventories for nearly all mills in the region. This steady demand met by ample supply led to consistent prices for all species; the delivered cost of pulpwood rose just slightly by the end of the first quarter.
Aspen pulpwood averaged over $40 per ton, starting the quarter at $40.76 per ton in January before increasing to $40.81 per ton in February and then to $41.12 per ton in March. The average price for hardwood pulpwood was just over $44 per ton. The delivered cost of hardwood pulpwood started the quarter at $44.03 per ton, fell to a quarterly low of $43.39 per ton in February, and rebounded to end March at $44.29 per ton.
Softwood pulpwood pricing approached $47 per ton but was more variable, likely due to changing seasonal demand and mill inventory targets. Like hardwood, softwood pulpwood prices experienced and recovered from a mid-quarter dip. Prices ranged from $47.41 per ton in January to $45.93 per ton in February and $47.84 in March.
As the quarter drew to a close, challenging spring weather led to one of the longer break-up seasons in recent memory. The effects this shortened logging season will have on inventory levels and subsequently, pricing, over the next several months remains to be seen.