Hardwood fiber purchases increased by more than 9 percent in the second quarter across the South as mills built inventory. Weighted average delivered hardwood fiber prices fell $2.34/ton.
“Inventories have decreased steeply since 3Q2009, and that continued through the first quarter,” said Forest2Market Vice President of Operations Daniel Stuber. “So even though hardwood purchases were up 9 percent, this was primarily a move to build inventory after winter log shortages. At the same time, mills cut hardwood production. Frankly, it doesn’t look like production will increase anytime soon, since inventories have returned to year-ago levels. As a result, we expect prices will continue to fall.
“We may see more inventory builds in fall due to seasonality,” said Stuber. “We may even see mills build inventory above their usual fall levels over concern that wet weather could once again restrict supply. If this occurs, it will stymie the fall in prices."
Purchases of all classes of hardwood fiber increased during the quarter, with pulpwood up nearly 7 percent, primary chips up 9.5 percent and secondary chips up more than 20 percent. Prices ended the quarter near $41/ton; primary chips fell nearly $1/ton, but pulpwood prices accounted for the largest portion of price declines.
Suz-Anne Kinney
Forest2Market: July 14, 2023
