Seattle, USA. Lower operating rates at the major pulp mills in Brazil and healthy inventory
levels of wood fiber took pressure off prices of Eucalyptus pulplogs in the 2Q/19.
Eucalyptus pulplog prices have been on a roller-coaster ride ever since the Wood Resource
Quarterly began tracking wood fiber prices in Brazil in 1988, mostly due to fluctuations in
the exchange rates and changes in the fiber demand/supply balance.
Pulpmills in Brazil had some of the lowest wood fiber costs in the world in the 2Q/19,
according to the WRQ. Over the past three years Eucalyptus pulplog prices have fallen
while the global Hardwood Fiber Price Index (HFPI) has trended upward to reach its
highest level in four years.
Following a 15-year period from 1988 to 2003 when prices fluctuated between US$20-
50/odmt, prices took off and trended upward for almost eight years to reach an all-timehigh
in the 3Q/11. From 2011 to 2015, prices fell substantially to reach an 11-year low in
the 4Q/15, which was followed by a period with slightly higher prices. In the 2Q/19, the
average price reached its lowest level in over three years as the value of the US dollar
strengthened.
It is interesting to compare the price developments for Eucalyptus in US dollar and
Brazilian Real terms, as the exchange rate between the two currencies has fluctuated quite
substantially over the years. Pulplog prices in Brazilian Real terms have generally trended
upward over the past 15 years and reached a 25-year high in early 2019 when the average
price was 50% higher than in 2005 (see chart). During the same period, prices in US dollar
terms doubled before taking a plunge to 2005 levels. Pulpmills in Brazil now have some
of the lowest wood fiber costs in the world.
For the past eight years, the Eucalyptus pulplog prices in Brazil have consistently been
lower than the global Hardwood Fiber Price Index (HFPI), a weighted average of
delivered wood fiber prices for 15 key hardwood pulp-producing regions of the world. The
discrepancy between the average Brazilian pulplog prices and the HFPI actually reached a
15-year record in the 2Q/19 when Brazil’s price fell to 70% of the HFPI price index. Wood
fiber costs as a percentage of market pulp prices have been at record lows over the past
year, leading to healthy profit margins for the industry. Copyright 2024 Walden-Mott Corporation All rights Reserved.
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