Pulp fact, not fiction.

• Author: Swagel, Will
• Position: Alaska's timber industry - Industry Overview

Dramatic changes in the timber industry spurred price increases for Alaska's wood, but also triggered declines in timber employment, particularly in Southeast, where the majority of the state's timber workers are employed.

It's not pulp fiction: Wood pulp prices more than doubled from 1994 to 1995. The increased demand for pulp wood is good news for Alaska forest product companies, some of whom used to consider their pulp wood a liability.

Analysts say a combination of factors is responsible for the price explosion. Poor cotton crops in China, India and Pakistan have revved up the market for rayon, produced from dissolving pulp. Also contributing to the price increase is the development of Lyocell, a pulp-based material used to make fine fabrics and fancy paper. A continuing demand for paper products, growing with the world's population, further contributes to the high prices, say experts.

Prices over $1,000 per metric ton (compared to about $400 in 1994) are common, with Asian spot markets paying up to $1,300, reported Pulp and Paper Week earlier this year. A corresponding increase in pulp log prices, from $200 per thousand board feet (mbf) to $400 mbf, was also cited by Klukwan Forest Products Inc. president Bob Loiselle.

Demand for pulp is offsetting a low in timber prices, due mainly to a slowdown in U.S. homebuilding, in turn due to higher mortgage interest rates. The June issue of timber industry publication Random Lengths reported framing lumber composite prices of $279 mbf, down $138 mbf from last year's $417 mbf.

The conflicting directions of the pulp and lumber markets are keeping timber prices reasonably steady, says U.S. Forest Service regional economist Kathleen Morse.

The high pulp prices are especially good news for producers on the Kenai Peninsula and interior Alaska, where white and Lutz spruce trees damaged or killed by the spruce bark beetle are finding ready markets.

Overall, however, timber employment is down statewide from the high levels seen five years ago. Industry lays the blame on unwieldy government regulations and lawsuits from environmental groups. The Forest Service and the state, meanwhile, say their agencies are dealing with changing perceptions of the role of public lands, while environmental groups say market forces are responsible for the drop in jobs.

The future? There's a mixed bag of opinions on the pulp high. Some say increased production in the worldwide pulp and timber markets will cool the...