Low wood fiber costs in Brazil have continued to attract investments in pulp production capacity leading to substantial increases in market pulp exports in 2016, reports the Wood Resource Quarterly Seattle, WA -  Brazil’s pulp sector has for over two decades had some of the lowest wood fiber costs in the world, making the industry highly competitive, reports the Wood Resource Quarterly. The low production costs have resulted in major investments in pulp production capacity with a majority of the pulp being exported overseas, predominantly to China. The export market for pulp produced in Brazil has become increasingly important for the pulp sector with the export share of domestic production having gone up from 55% in 2007 to almost 70% in 2016. Pulp export volumes have expanded in an impressive fashion over the past two decades, with increased year-over-year shipments for 19 of the past 20 years. This trend continued in 2016, with export volumes likely to reach almost 13 million tons, an increase of about 11% from 2015, reports the Wood Resource Quarterly. Not surprisingly, China’s steady increase in demand for pulp the past decade has been the key driver to Brazil’s pulp export success story. Over one-third of Brazil’s exports were destined for China this year, up from 23% five years ago. Brazil has become the second largest producer of wood-based pulp in the world behind the US, having surpassed Canada in 2016. The driving factors have been a combination of low wood fiber costs, a dramatically weakening Brazilian Real, and a steady increase in demand in particular for hardwood market pulp in China. Over the past three years, wood fiber costs in Brazil have been approximately 60% of the manufacturing costs, according to Fisher International. The high cost share for wood fiber, together with being one the lowest-cost pulpwood regions of the world, has made Brazil’s pulp industry a very competitive pulp producer for many of the past 25 years. In US dollar terms, Eucalyptus pulplog prices have fallen from a record-high in the 3Q/11 to a 12-year low in the 4Q/15. Since the end of 2015, wood fiber prices have gone up but are still substantially below their ten-year average, as reported by the WRQ (www.woodprices.com). The past two decades have not only been mostly good news for the pulp industry in Brazil, but also for timberland owners measuring their financial results in the Brazilian Real (BRL). In 2016, eucalyptus pulplog prices reached their highest level on record since WRQ started tracking pulplog prices in Brazil over 20 years ago. Current prices are about five percent higher than one year ago in the local currency, and 23% above the average price two years ago.