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Forest2Market Report Shows Changing Demand for Wood Fiber is Impacting Residuals Markets

As global consumer trends and demands continue to shift at an escalating pace, a new Forest2Market report shows that both structural and temporal market shifts in recent decades have impacted the markets for wood fiber residuals. The report, Changes in the Residual Wood Fiber Market 2004 to 2017, analyzes data from the US Forest Service, Forest2Market’s proprietary database of timber transactions and other scientific research in the US South and the Pacific Northwest (PNW) to understand the relationship between the supply and demand of wood residual materials over a 14-year period. The report was commissioned by Resources for the Future (RFF), the US Endowment for Forestry & Communities, Inc.(Endowment) and the National Wooden Pallet & Container Association (NWPCA). 

The study found that the underlying market forces that most impacted the residual market in these two regions include:

1. The structural decline in printing and writing papers and other end products derived from hardwood fiber.
2. Buoyant demand for softwood fiber driven by strong pulp markets and bioenergy in the form of pellets.
3. Renewed softwood lumber demand and announced capacity in the US South present challenges, though more for landowners than producers of residuals.
4. Fiber constraints in the PNW that have hindered growth and led to stagnant, but stable markets.

“While global markets continue to chase consumer trends, this report clearly demonstrates that rapidly-changing preferences present new opportunities for an evolving forest industry” said Pete Stewart, President and CEO of Forest2Market. “Structural changes have affected the hardwood market in the South in ways that cannot be reversed, and the increased demand for softwood makes the resource-dense region a profitable destination with globally-low cost structures. However, any growth opportunity in the PNW will be hamstrung due to high costs and resource constraints.”

Strong markets for products like wood chips, biofuels and sawdust, allow the wood packaging sector to approach zero-waste,” said National Wooden Pallet & Container Association President & CEO Brent McClendon. “We were pleased to work with Forest2Market on this timely study as the current trends impacting hardwood and softwood residuals markets needed to be better understood.” McClendon continued, “The wood packaging industry is proud that 95% of all wood pallets are reused, refurbished, and recycled. In addition to being used for wood pellets, mulch, and paper, our industry’s environmental success story needs a full array of strong markets for wood residuals, and this study provides useful information to guide future policy discussions.”

Courtesy of John Greene, Forest2Market