Navigating the Woods: A Preview of 2024 in Forest Products
This content is being republished with the consent of Fisher International and ResourceWise. Read more about Pulp and paper industry at ResourceWise. Jan 08, ‘24
In the wake of 2023’s dynamic market shifts and unforeseen challenges, the pulp, paper, and forest industries braced themselves for transformation. From demand and price fluctuations to a growing interest in biofuel possibilities, the sector underwent noteworthy changes.
As we step into 2024, let’s explore the top insights and forecasts for the pulp, paper, and forest products industry. Here are five key predictions shaping the upcoming year.
2024 Predictions: A Glimpse into the Future
The era of inventory destocking, a central theme across industries in 2023, is drawing to a close. This has positive implications for the global pulp and paper industry, as well as solid wood and lumber markets. Inventory destocking played a crucial role in the 2023 economic narrative. With its conclusion and indications of the Federal Reserve’s interest rate hikes easing, economic confidence is on the rise. This sets the stage for a resurgence in industrial sector activity, anticipated in the first quarter of 2024.
Forestry investments in 2024 are expected to focus primarily on the US South. The forests in this region, including North Carolina, are known for their remarkable productivity and cost-effective fiber. Looking ahead, while landowners may wish for a surge in log and fiber prices, the scales currently tip towards an oversupply. Nevertheless, the low cost of log fiber becomes an incentive for new manufacturing, potentially increasing the demand for logs and fiber.
Housing starts are predicted to remain relatively robust in 2024, hovering between 1.3–1.5 million starts. Furthermore, the demand for engineered wood—CLT, glulam, I-Joists, and mass timber—will continue to grow, supporting the demand for sawlogs.
The investment in bio-economy production at pulp mills is expected to increase. Governmental regulations like the Green New Deal in the EU and incentives such as the Inflation Reduction Act are likely to drive a surge in investments for low-carbon biogenic fuels, chemicals, and materials. The significant biogenic carbon dioxide generated by pulp mills, coupled with growing consumer demand and government support, is expected to fuel this investment trend.
Global operating rates in the pulp and paper industry are anticipated to continue improving, bringing stability to the sector. Following a period of sluggish growth and declining prices, there are promising signs of a market upturn. For instance, the average price for corrugated containers saw a notable increase of $9 per ton in September. After standing at $54/ton in August, prices jumped to $63/ton in September.
To restore the balance between supply and demand, struggling mills, particularly in free-market economies, have been compelled to shut down. However, China’s operating rates may remain lower in the coming year and potentially for several years. Industry experts attribute these gradual price increases to recycled fiber mill projects and a steady rise in overall fiber demand in North America.
Conclusion: The Forest Products Frontier of 2024
Despite the potential for ongoing fluctuations, the outlook for the pulp, paper, and forestry industries in 2024 remains optimistic. As we venture into the new year, we look forward to witnessing how these predictions unfold and shape the future of the forest products industry.
