Reduced consumption of lumber in North America and Europe in the 3Q '08 resulted in lower demand for sawlogs and declining prices for softwood timber, according to the Wood Resource Quarterly (WRQ).

For Immediate Release

BOTHELL, Wash./EWORLDWIRE/Jan. 26, 2009 --- Reduced consumption of lumber in North America and Europe in the third quarter of 2008 resulted in lower demand for sawlogs and declining prices for softwood timber, according to the Wood Resource Quarterly (WRQ).

Because wood costs account for 65-75 percent of the production costs when producing softwood lumber, they are the key factor determining a region's or company’s competitiveness.

The WRQ Global Conifer Sawlog Price, based on sawlog prices in 19 key regions worldwide, fell 5.8 percent to US$85.92/m3 in the third quarter of 2008, the lowest level since the first quarter of 2007. The recent price decrease is one of the biggest quarterly declines seen since the Index was first published in 1995.

The major reason for the lower log costs was the weakening of lumber markets in most regions around the world. The biggest declines in log prices occurred in Western Canada, Sweden, Germany, the Baltic States and New Zealand.

In the U.S., prices were down about five percent from the second quarter of 2008, while log costs in Brazil and Chile were practically unchanged.

The sawmill sector has been hit hard in Canada as a result of a sharp decline in housing construction in the important U.S. market. Housing starts in the U.S. have fallen from 1.5 million units in early 2007 to 625,000 units in November of 2008.

The biggest decline in sawlog prices came in coastal British Columbia, where Douglas-fir and hemlock log prices fell about 10 percent from the previous quarter, in U.S. dollar terms, and were more than 20 percent lower than a year ago.

Most sawmills have reduced production temporarily and there have also been permanent closures.

Lumber production in Biritish Columbia was 24 percent lower in the third quarter of 2008 compared the same quarter in 2007.

Sawlog prices fell in most regions of Europe in the third quarter as the demand for lumber declined not only in Europe but also in the U.S. and in Japan, both important overseas markets for sawmills, particularly in the Nordic countries and Germany.

Log prices fell the most in the Nordic countries where average costs were between 5-10 percent lower than in the seocnd quarter. Despite this decline, wood costs for sawmills in Sweden and Finland are still among the highest in the world and substantially higher than they were two years ago.

Global pulpwood and sawlog market updates are included in the 50-page publication Wood Resource Quarterly. The report, established in 1988 and with readers in over 20 countries, tracks wood prices in most regions around the world and also includes regular updates of international timber, pulp, lumber and biomass markets.

Contact information:
Wood Resources International, Hakan Ekstrom
info@wri-ltd.com
'http://www.woodprices.com'

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CONTACT:
Hakan Ekstrom
Wood Resources International LLC
10654 NE 204th Pl
Bothell, WA 98011
PHONE. 425-402-8809
EMAIL: hekstrom@wri-ltd.com
http://www.woodprices.com

SOURCE: Wood Resources International LLC