To navigate what can be a volatile market across paper packaging and wood products, gaining market-reflective and unbiased pricing information is crucial to safeguarding competition and fairness. Buyers need a neutral benchmark to enable the fairest and most accurate price for any given time.
Some suppliers utilise their own cost-plus models, internal indices or pricing formulae. However, this can expose purchasers to risks such as artificially inflated costs, lack of transparency and potential conflicts of interest.
Consequently, the golden rule in procurement is that buyers should always seek third-party validation of pricing.
Why it matters: In a volatile market, relying on independent, third-party pricing ensures that procurement decisions are based on real market data, not influenced by the interests of a single party. Without this impartiality, both buyers and sellers risk making decisions based on distorted or speculative information that could lead to overpayment or missed opportunities.
The importance of using third-party indices
Incorporating third-party indices into contracts offers a robust solution to these challenges, ensuring fair pricing and fostering healthier supplier relationships, and provides checks and balances in a concentrated market. A Price Reporting Agency (PRA) ensures that every link in the value chain operates efficiently, benefiting buyers, sellers and intermediaries alike.
Within any given trade, each party will have a different strategic aim – not surprisingly, producers are looking to achieve maximum profitability, while buyers are targeting cost-efficiency and reliability. As a neutral third party, Fastmarkets will report prices according to our analysis of the market, without preference.
In a highly consolidated industry, an external benchmark preserves room for smaller players or alternative sourcing options (including imports), fostering a more robust, competitive market and safeguarding competition and fairness. Producers with authentic cost pressures can demonstrate their rationale through neutral data, winning buyer trust.
The value to the forest industry of referencing these benchmarks are that they are based on neutral, data-driven transaction evidence rather than unilateral claims. Buyers and sellers alike can rely on Fastmarkets’ assessments as a guard against sudden or unsupported increases.
Why it matters: Whether negotiating with suppliers, managing costs or assessing the health of the broader market, buyers need to know they are working with data that reflects actual transactions and prevailing market conditions. Fastmarkets’ independent indices protect all stakeholders from the influence of one party’s interests and ensure that prices are based on verifiable, market-driven data.
Our pricing methodology
It is crucial that price assessments serve the industry effectively and fairly. At Fastmarkets, independent valuation is key to how we assess price. We collect and analyze price points from direct consultation with buyers and sellers, based on verified transactions taking place in the open market. These come from a diverse range of sources such as integrated producers, non-integrated mills, converters and buyers.
We do this to reflect true market conditions and introduce objectivity into the pricing mechanism. As an independent cross-commodity PRA, the floating prices we report highlight prevailing market conditions that ensure transparency, without a single narrative dominating.
Our pricing methodology is fully compliant with the International Organization of Securities Commissions (IOSCO) Principles for its price assessments and indices. By providing unbiased market insights and custom indices, we can help buyers make informed, strategic procurement decisions that reflect the reality of industry transactions.
Why it matters: Pricing isn’t just about numbers—it’s about the integrity of the market. Without a neutral party such as Fastmarkets, pricing could be shaped by individual agendas rather than the true state of the market. Our impartial process ensures that everyone from small mills to large buyers has access to the same reliable data, keeping the playing field level.
Sign up now to access to our whitepaper: Navigating price volatility in the forest products industry.
