The organisation, a global wood price data source, said that weakening demand for pulp and lower product prices squeezed pulp company profit margins, forcing many companies to reduce their wood fibre prices.

According to the WRQ There has been a long-term trend in the pulp industry of wood costs increasing as a percentage of the total production costs.

It stated: "In the 3Q/2011, this share had reached 63.5% on a worldwide basis, up from only 53% in 2005.

"However, this share can vary substantially, from a current low of 52% in Eastern Canada to as high as 73%. For this reason, tracking wood fibre prices over time has become more important when comparing competitiveness of different regions worldwide."

The WRQ also said that wood fibre costs are likely to continue downward in a number of markets in 1Q/2012, particularly in the Nordic countries, Western Canada and the US as pulp prices continue to be substantially below the record-high levels from last summer.

This article originally appeared at printweek.com