The initiative by FOEX and WRI to establish a group of global and regional price indices for wood chips used for pulp manufacturing and in energy generation is showing its first results

FOEX has available a regional index, to be published starting September, for forest chips in Finland. This index covers energy wood, forest harvest residues and stumps. The prices are given in €/MWh delivered to power plant. The prices include reports both from producers and users of forest chips. FOEX estimates that this Finnish, so far unofficial, index covers already roughly 50 % (4 million MWh) of the volumes on the market and FOEX expects the participation to increase during the second half of 2011.

A similar regional index development project with participants from producer and power company side has been launched also on the Swedish market. There the index is expected to be completed by the end of 2011.
On the global level, FOEX is going to launch three indices: Hardwood chip index for pulp production (USD/ton), Softwood chip index for pulp production (USD/ton) and woodchip index for energy use, softwood or hardwood (USD/MWh).
FOEX has decided to collect and publish the data on CIF-basis; i.e. in the format which is best suited for evaluating the changes in wood costs at the consuming end. The incoming FOB-prices are converted, with freight costs or other statistical means, to corresponding CIF values.
FOEX has been collecting data in collaboration with industry experts worldwide in order to develop the most accurate picture of global woodchip price and has combined the monthly values received at FOEX with the quarterly data provided by our partner, WRI (Wood Resources International). For participants, FOEX has already been sending unofficial time-series of the material collected so far.
The official launch of an index takes place next autumn once the number of participants is high enough.
The sales of chips for energy use are so far too limited for the price index to be statistically reliable and meaningful – but will become important in a not-too-distant-future. In the meanwhile, FOEX will follow the values of pulp chip indices also in USD/MWh.