menu-bgimg

What we can offer you

We provide detailed transactional data, cost benchmarks and in-depth analytics for participants in the wood raw materials supply chain.
  • Pricing Data
  • Benchmarks
  • Product Forecasting
  • Advisory Services
  • Analytics
Learn More

SilvaStat360 Platform

  • Price Benchmarks
  • The Beck Group’s Sawmill TQ
  • Timber Supply Analysis 
  • Global Economic Data

Explore Forest2Market's Interactive Business Intelligence Platform

Learn More

Industries

From biomass suppliers in the Baltics to pulp producers in Brazil and TIMOs in the United States, Forest2Market provides products and services for suppliers, producers and other stakeholders in the global forest products industry.

Learn More
x
 
Blog

Forest Products Industry Impacted By Higher Costs

May 14, 2007
Author: Suz-Anne Kinney

Higher raw material costs continue to hamper the forest products industry, negatively impacting earnings during the first quarter of 2007. Prices for delivered logs and chips increased during the first quarter costing paper, paperboard and solid wood manufacturers $2.4 billion, or an additional $64.7 million for virtually the same volume from the fourth quarter of 2006, according to Forest2Market, Inc. (F2M), a Charlotte-based provider of pricing data for the forest products industry.

According to F2M’s Free on Board (FOB) Delivered Pricing Benchmark service, paper and paperboard manufacturers’ raw material costs were approximately $34.80 per ton, an increase of almost $1.50 per ton from the fourth quarter of 2006. Raw material costs were affected for the most part by seasonal weather patterns during the quarter as evidenced by a 21 percent reduction in mill inventories from the fourth quarter. Cost increases, however, were partially offset by decreased mill production (measured by mill consumption). Consumption was three percent less than the prior quarter.

As for the solid wood sector, manufacturers were unsuccessful in cutting raw material costs in the wake of weakening demand for lumber and panels. Raw material costs for the solid wood sector were $52.05 per ton, an increase of $0.28 per ton from the fourth quarter of 2006. As with the paper and paperboard sector, raw material prices were affected for the most part by seasonal weather patterns. Mills, however, were disciplined in their purchases this period despite declining inventories of approximately four percent.

The outlook for the second quarter is positive for paper and paperboard manufacturers. Raw material costs were decreasing in March and will continue as seasonal weather patterns are expected to improve. Mill inventories are expected to recover as a result, allowing mills to balance supply with paper and paperboard demand. On the downside, the weakened state of the housing market will continue to put pressure on solid wood manufacturers. Raw material costs for solid wood manufacturers are also expected to benefit to some degree from improved weather patterns, but mills will be forced to reduce production in order to align solid wood demand with supply. This will have a negative affect on the supply of solid wood residuals, causing FOB price increases for residual chips to the paper and paperboard sector.

F2M collects FOB delivered price data on a transaction basis from forest products companies in order to establish a credible and reliable cost benchmark for delivered logs and chips. While serving the forest products industry with solutions since 2000, F2M is celebrating its first full year of FOB delivered cost benchmarks collected from 75 percent of all wood fiber transactions in the southern U.S.

To use the FOB delivered service, forest products companies must provide F2M with their actual data, on a load-by-load transactional basis. F2M then organizes the data in a consistent manner and computes a weighted average benchmark, which is updated quarterly. Benchmarked raw materials include pine pulpwood, hardwood pulpwood, pine sawtimber, pine and hardwood chips and residual woodfuel. F2M also collects and reports weighted average inventory levels for the southern U.S.

Forest2Market was founded in 2000 to bring solutions to participants in the forest and wood products supply chain. F2M provides raw material pricing data for the forest products industry that is current, local and accurate, thus allowing landowners and forest products professionals to make more informed decisions. F2M’s suite of customized market-based analytics allows both buyers and sellers to make better fact-based decisions.


Suz-Anne Kinney: +1 980 233 4021 or suz-anne.kinney@forest2market.com
Back to Blog

You May Also be Interested In