Released on: July 14, 2008, 2:37 am

Press Release Author: Hakan Ekstrom

Industry: Agriculture

Press Release Summary: Australia, which is the major supplier of hardwood chips to
Japan, currently supplies 34% of the Japanese total import volume. The two other
large Eucalyptus chip suppliers, Chile and South Africa, have also substantially
increased their prices since early 2000.


Press Release Body: Seattle (USA) July 14, 2008, Export prices for both pine and
Eucalyptus wood chips have gone up substantially in 2008 in Australia as a result of
increased demand in Japan and a tighter supply of wood chips throughout the Pacific
Rim region, according to the Wood Resource Quarterly.

Australia has become the world's largest exporter of wood chips, shipping a record
of over 6 million oven-dry metric tons (odmt) in 2007, with 2008 promising to be
another strong year. Eucalyptus chip, most of which is still from native forests, is
by far the most common species exported, accounting for approximately 70% of the
total exports in 2007. The remaining 30% is predominantly residual chips from
sawmills using plantation-based radiata pine.

Japan has been the major destination for Australian chips, with occasional vessels
going to South Korea, Taiwan, Indonesia and China. The country has been the top
supplier of both softwood and hardwood chips to the Japanese pulp industry since the
1990's and will most likely continue to be so for many years to come. The future
market share will depend to a large extent on the domestic demand for wood fiber in
Australia, as the pulp sector is planning to expand.

Australian Eucalyptus chip export prices have more than doubled the past six years
and are currently US$167/odmt FOB vessel in Tasmania for native species and about
US$187/odmt for plantation wood chips. Australia, which is the major supplier of
hardwood chips to Japan, currently supplies 34% of the Japanese total import volume.
The two other large Eucalyptus chip suppliers, Chile and South Africa, have also
substantially increased their prices since early 2000. Just since last year, prices
have increased 19% in Chile and 14% in South Africa.

For the first half of 2008, Australian export prices for softwood chips to Japan
ranged between US$147-151/odmt. These prices are 45% higher than in late 2006, and
almost a doubling since 2003. This upward price trend has been slower than in the
US, which is the second largest chip supplier to Japan. Since Japanese pulp
companies have a limited number of suppliers to choose from, it is likely that they
will have to get used to high wood fiber costs in 2008 and 2009.

The increasing costs for Australian wood chips, which are perceived to be of lower
quality than North American species by some pulp companies in Japan, have resulted
in a reduction of market share for Australian suppliers from 46% to 41% between
4Q/06 and 4Q/07. US suppliers, on the other hand, increased their market presence
from 25% to 32% of the total imports during the same time period. Despite the
preference for Douglas-fir chips from the US, Japanese pulp manufacturers may be
forced to use more chips from Australia, New Zealand and Canada as availability is
limited in the US.

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 pulp, lumber and biomass markets.
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Contact information:

Hakan Ekstrom
Wood Resources International
Seattle, USA
+1 425 402 8809
info@wri-ltd.com
http://www.woodprices.com

Web Site: http://www.woodprices.com

Contact Details: Hakan Ekstrom
Wood Resources International
Seattle, USA
+1 425 402 8809
info@wri-ltd.com
http://www.woodprices.com