Though they fell slightly in 2Q2014, pine pulpwood prices are up $1.24 per ton or 3.5 percent from a 2Q2013 average price of $35.03/ton to $36.27/ton. Between 2Q2013 and 2Q2014, demand for pine pulpwood increased by 2.9 percent. Stumpage prices have risen in response to demand, gaining $1.00/ton. Freight costs rose 1.9 percent or $0.18/ton, while handling costs (cost of harvesting the timber) remained steady, gaining just $0.06/ton.
In 2Q2014, pine pulpwood prices decreased $0.45/ton or 1.2 percent from the 1Q2014 average price of $36.73 per ton. Demand for pine pulpwood declined slightly as total purchase by volume was down 1.1 percent in 2Q2014. Freight costs increased an average $0.15/ton. Stumpage and handling costs, on the other hand, were lower, down $0.38/ton and $0.23/ton, respectively.
The current US South hardwood pulpwood average delivered price is $43.01 per ton. Year over year, prices have increased $3.48/ton or 8.8 percent from a 2Q2013 average price of $39.53/ton. Although hardwood pulpwood demand decreased 1.2 percent during this period, stumpage prices gained ground. At $2.81/ton, stumpage prices are 24.9 percent higher than they were one year ago. Freight costs also increased an average $0.05/ton or 4.4 percent, and handling increased an average $0.16 per ton or 1.0 percent.
During 2Q2014, hardwood pulpwood prices declined $0.19 per ton or 0.4 percent from the 1Q2014 average price of $43.20/ton. Stumpage costs rose $0.36/ton, freight rose $0.03 per ton, and handling cost fell $0.59 per ton.
Wood fuel delivered price gained $1.59/ton or 8.0 percent from the 2Q2013 average price of $19.94/ton to $21.53/ton in 2Q2014. Increased demand influenced the escalation in wood fuel delivered price. A 12.9 percent increase in demand was driven by biomass power facilities and pulp and paper mills with biomass boilers increasing production. This increase in demand exerted upward price pressure on wood raw material costs that rose $1.42/ton or 12.4 percent. Freight costs increased an average $0.17/ton or 2.0 percent.
Quarter over quarter, wood fuel delivered prices increased by $0.46/ton to an average of $21.53/ton. Freight costs that increased an average $0.41/ton caused the delivered price increase as demand declined and wood raw material costs remained steady, increasing $0.05 per ton. Purchases by volume were 1.7 percent lower in 2Q2014.
*Delivered costs are expressed in chip equivalent $/ton.
Would appreciate your perspective on the diverging pine vs. hardwood pulpwood price spread.
The majority of the divergence between pine and hardwood pulpwood is related to harvesting and stumpage costs. A significant portion of pine pulpwood in the US South is harvested from plantations that are more manageable to harvest and have predictable cost (normally on average around $13-$14 per ton). Hardwoods, on the other hand, are almost always harvested from native stands that have varying terrains and variable resulting harvests costs (on average around $15-$18 per ton). The rainfall over the past 1.5 years has also influenced an increase in harvesting cost for hardwood pulpwood.
Traditionally, hardwood pulpwood stumpage prices have been lower than pine pulpwood, but over the past few years hardwood stumpage prices have risen to or above pine stumpage prices. The quarterly trends of both products have been similar, but as hardwood is generally a come along product after natural sawtimber clearcut harvests, the harvesting and stumpage costs have elevated faster than pine.