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Rising pulpwood demand elevates risk of pulp mill closures

  • Publicado el 25 de Noviembre de 2015

Within the next two years, a significant increase in pulpwood demand is projected to lead to higher stumpage and delivered wood costs in the US South. Not only will pulp producers compete with OSB and wood pellets for fiber supply, they could also face greater competitive pressure in global markets. Margins could decline and some of the higher cost pulp mills may have to shut down.

These and other findings were just published in the US Southern Pulpwood Study: Emerging Competition, Mill Closure Risk and Future Prices – new research from RISI, the leading information provider for the forest products industry. Pulpwood prices are at record highs. Delivered pine is up 14 percent and hardwood is up 21 percent. Additionally, a recovery in US housing starts is expected to boost OSB output at the same time that large-scale pellet projects will commence operations. This could increase demand for pulpwood and push prices higher.

RISI’s latest research indicates that pulpwood demand will rise by as much as 10 percent over the next five years. This expanding competition for wood fiber will present new challenges for pulp and paper producers, particularly in states where plantations have been aggressively thinned. RISI’s sub-regional mill-by-mill assessment indicates the risks are pronounced in coastal regions but even further inland, wood costs are likely to rise.

“The US South has undergone significant changes over the last five years and age-class dynamics for plantation resources suggest that thinning supplies will no longer continue to increase like they have in the past. Our research indicates mills in the US South will face greater threat of closure until demand becomes rebalanced with supply. Pulp mills are the primary consumer of pulpwood and therefore mill closures within this sector will have to be part of the solution,” said Peter Barynin, lead author of the study and Principle Timber Economist at RISI. 

The US Southern Pulpwood Study analyzes pulpwood supply, demand, mill production costs and paper prices to determine the competitive standing of each pulp mill in this region. It offers insight into mills at greatest risk of closure, as well as those with the highest potential to overcome market challenges.

The study provides in-depth analysis of six sub-regions within the US South including a quantitative assessment of residual chip, OSB and bioenergy production. The study explains relative pricing within each sub-region and forecasts future trends for the supply and demand for pulpwood. For more information, request the prospectus at www.risi.com/uspulpwood.

Companies evaluated in the study include: Boise, Georgia-Pacific, GP Cellulose, International Paper, Weyerhaeuser, WestRock Co., Domtar, Verso, Resolute Forest Products, Graphic Packaging International, Interstate Resources Inc., KapStone, PCA, Cleanwater Paper, Rayonier, Evergreen Packaging, Green Bay Packaging Inc., Greif, White Birch Paper, Hood Container Corporation, KPAQ Industries.

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