Wood costs account for between 50-55 percent of the production costs for pulp mills in the US. Historically these costs have often been substantially lower in the Southern states than in the Northwest — the two major pulp-producing regions of the country. However, this has been changing with the most dramatic regional price movements in North America happening in the US Northwest, where prices for softwood chips, the major fiber source for the region’s pulp mills, have fallen for five consecutive quarters, says Hakan Ekstrom of Wood Resources International (WRI).
Chip prices in the second quarter of 2013 were down by a third from early 2012, according to figures in North American Wood Fiber Review a quarterly report published by WRI. In contrast, softwood residual chip prices in the US South have remained practically unchanged for over three years, even though the supply of wood chips has increased as the result of higher lumber production in the region.
Wood chip prices in the US South are still lower than in the Western states, but pulp mills in the Southern states are consuming a higher percentage of higher-cost wood fiber in the form of roundwood, making the total average fiber costs in the South only slightly lower than in the West. Just a few years ago, the average softwood fiber costs for pulp mills in the West were more than 50 percent higher than those in the South.
