The expansion of the pulp industry in Brazil has a remarkable history.
Over the past 30 years when the industry increased production from to 5 million tons to 22 million tons annually, there only three occasions when pulp production fell y-o-y. Major investments in new capacity has resulted in a steady increase in production and the country has become the largest producer of hardwood pulp in the world. It is not only a large producer of high-quality Eucalyptus pulp, but also the lowest-cost manufacturer of market pulp in the world thanks to competitive prices for pulpwood from fast-growing plantations.
Wood fiber costs have remained among lowest in the world for a very long time despite substantial increases in pulplog prices in the Brazilian Real. The past 20 years, both Eucalyptus and pine pulplog prices have gone up eight-fold from BRL25/m3 (delivered) in 2000 to almost BRL200/m3 in the 3Q/22 (see chart). Thanks to a continuously weakening of the Real against the US dollar, price increases have been less dramatic in dollar-terms, from US$15/m3 in 2000 to US$38/m3 in the 3Q/22.
Increased competition for wood fiber (both between pulp producers and for other users), rising land costs, higher labor costs and longer transportation distances are all factors that have moved prices upward, particularly the past two years.
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Wood Resources International LLC, a ResourceWise Company
Hakan Ekstrom, Seattle, USA