Global sawmilling costs reviewed

We reported last week on the changing dynamics of currency exchange rates among the major importing and exporting countries of the world and how they have had huge impacts on delivered log and sawmill costs since 2014.

We covered a summary of global earnings for sawmills last week taken from the just-released seventh edition of WOOD MARKETS Global Timber/Sawmill/Lumber Cost Benchmarking Report. This week we take a look at comparison of global sawmilling costs and lumber revenue.

Global Sawmilling Costs

Sawmills around the world vary in scale, technology, flexibility, log size and product/market strategies, so it’s not surprising that global sawmilling operating costs (before considering capital costs/depreciation) also show significant variances.

From a global perspective, average sawmilling costs (excluding logs) in 2014 at “average” mills were US$74/m3 (US$118/Mbf nominal, based on the mathematical average of all the countries/regions surveyed); this was slightly lower than in 2012. While costs in most regions stayed relatively stable, many decreased slightly as a result of currencies weakening relative to the U.S. dollar.

For full-year 2014, eight of the twelve lowest-cost “average” sawmills were in Europe or Russia. Average mills in the Baltics — as well as the Czech Republic, Finland and Russia — were well positioned at the low end of the cost scale. However, China had by far the lowest-cost sawmills.

As in previous surveys, the highest sawmilling costs were seen in Australia and South Africa (in excess of US$100/m3), followed by New Zealand and Eastern Canada. Relatively high wages and/or lower productivity were the main factors driving costs in the Southern Hemisphere, whereas in Eastern Canada it had more to do with having the smallest-diameter logs in the survey (and having smaller “average” mills than other North American regions).

Lumber Revenue

Average global lumber revenue (FOB mill) in 2014 at “average” mills ranged at US$151–$289/m3 (average: US$229/m3). Australia and Germany had the highest lumber revenues for the year, while Brazil and the Canadian Prairies, respectively were the lowest-revenue (FOB mill) jurisdictions. While for Brazil this had much to do with currency depreciation, the issue for Alberta was its lower-valued lumber produced from smaller-diameter logs, coupled with longer distances to markets in Eastern Canada and the U.S. Lumber revenues at “average” North American sawmills dropped in Q1/15 versus 2014, moving down by US$30/m3 (to US$199/m3; US$318/Mbf nominal).

Further details can be found here.

Source: WOOD MARKETS