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Q1 2024 Forisk Wood Fiber Review: PNW Residual Chip Prices Continue Downward Trend; Whole-Log Chip Production Regaining Momentum

This blog includes data from the Forisk Wood Fiber Review, a quarterly publication tracking North America’s major wood fiber markets. For more information, please visit www.forisk.com.

At first glance, the Q1 2024 increase in whole-log chip prices might look like that portion of the market is doing well – maybe even better than the residual chip market since all prices in that category decreased. The real story is a little more complicated.

When WestRock’s Tacoma mill closed last September, the whole-log chip market was negatively impacted, as they were a large consumer. The oversupply of residual chips on the market caused the production of whole-log chips to slow to little more than a standstill. During this time, whole-log chip producers wanting to sell their chips had to do so at a loss at the same price as residual chips. In addition to cutting production, many producers found new markets by exporting them to Canada. The Pacific Northwest lost at least one supplier that was dedicated to producing whole-log chips.

As sawmill closures and curtailments continued into Q1 2024, the market demand for whole-log chips rebounded from the lows in Q4 2023. More (relative) demand for whole-log chips meant that the prices increased from last quarter, but not year-over-year, or even since mid-2023 prices, except East of the Cascades where whole-log chip prices have been lower than other areas in the region.

This spring, mill maintenance outages will influence the market. Some consuming mills will take longer than average downtimes for maintenance this year. If mills are not accepting trucks during their outages, chip inventories will either need to be larger going into an outage or will need to be ramped up quickly as the mill wakes from the outage. Whole-log chips will need to be in the mix as residual chip production from sawmills may not cover the demand.

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