08/28/2012 04:32 EDT | Updated 10/28/2012 05:12 EDT

B.C. bucks global trend as demand in Asia and U.S. boosts sawlog prices

MONTREAL - British Columbia bucked a global trend as strong demand from Asia and the United States boosted sawlog prices in the second quarter.

Global prices fell for the fourth consecutive three-month quarter and were 11.5 per cent lower than a year ago, industry publication Wood Resource Quarterly said Tuesday.

The only exceptions were Canada's key wood producing region and the western U.S. No specific price increases were disclosed.

The Global Sawlog Price Index was US$82.90 per cubic metre in the quarter. The index, which measures sawlog prices in 20 regions of the world, was down 3.4 per cent from the first quarter and off from its 17-year high last year.

The largest price decreases were in Europe, where demand has fallen because of financial crises in many countries. Prices were on average 14 per cent lower than the second quarter of 2011 and were off 18 per cent in the Nordic countries.

Canadian producers have been helped by a 13 per cent increase in U.S. lumber consumption in May, marking the highest month of May since 2008. Home construction reached a two-year high in June and has gradually been increasing after several years of depressed activity.

The Canadian sawmilling industry ramped up production the first five months of 2012. Pine lumber prices in the U.S. South have increased almost 35 per cent this year, while sprucepine-fir (SPF) prices in Canada used to build homes have increased by about 30 per cent, the publication said.

China's importation of softwood lumber increased up 27 per cent from the first quarter, but were up less than one per cent from a year ago.

European log prices have fallen more steeply than lumber prices, which only declined an average of eight per cent from a year ago. Despite increasing slightly in the past few months, lumber prices are still well below the average for the past three years.

In U.S. dollars, log prices fell most in Brazil, Japan, the Czech Republic, Sweden and Russia.

Sawlog prices was substantially higher in Eastern and Central Europe. Prices in Poland were up 32 per cent from two years ago, log costs in Austria have increased 15 per cent since 2010.

Only Sweden and Norway had lower log costs than two years ago.

Meanwhile, uncertainty in pulp markets, lower pulp and paper prices and a large supply of sawmill chips put downward pressure on wood fibre prices, added the Wood Resource Quarterly.

The Softwood Wood Fiber Price Index (SFPI) fell 4.1 per cent to US$100.54 tonne. The biggest price declines occurred in Brazil, the U.S., Northwest, Australia and Eastern Canada.

Hardwood fibre prices have fallen even more than softwood fibre prices this year. The Hardwood Wood Fiber Price Index (HFPI) was US$104.88 tonne, down 4.4 per cent from the previous quarter.

Global demand for market pulp continued to decline, particularly in Europe and North America.

Softwood market pulp (NBSK) prices in Europe were around US$790 per ton in July, down from US$1,040 per ton in the second quarter last year. Hardwood pulp decreased to US$770 per ton from US$880 in July 2011.