Digital Assets Report

Newsletter

Like this article?

Sign up to our free newsletter

AAA reports worldwide rise in timber prices

Related Topics

Alternative Asset Analysis (AAA), an alternative investment advocacy organisation, reports that global demand for timber has increased, resulting in higher prices across Europe, Japan, China and the United States.

AAA collated industry lumber data from a number of sources and cross-referenced it against reports from the North American Wood Fiber Review and from Wood Resource Quarterly.

Log buyers in Japan, South Korea and China are driving up demand for timber from the US and, as a result, prices have risen significantly, according to the new North American Wood Fiber Review.

Worldwide demand for softwood lumber rose 18 per cent in 2010, continuing a trend that had already been occurring in China and Japan since early 2009. Global wood consumption for the first quarter of 2011 is up around 20 per cent on last year.

"The official results of the wood fiber review show all regions of North America saw prices trending upwards over the past two years, with growth particularly notable in the north west regions," says Anthony Johnson, an analyst, fund manager and partner at AAA.

These positive comments follow news that log exports to Asia from the west coast of the US have reached their highest point for 14 years. Other regions have also seen price increases and export growth, but not to the same extent as the north west corner and coastal regions, where prices have really soared.

The news is great for the US forestry industry, which has been through a tough time of late with the domestic housing market slump. China, on the other hand has an insatiable need for raw materials to use in its massive growth and development projects. It is turning to the US for its timber following the introduction of new taxes in Russia where it had previously sourced its timber.

The rise in prices was perhaps most notable on Douglas fir logs in the fourth quarter of 2010, with prices rising by 19 per cent from a year before. In addition, hemlock sawlog prices were up by an impressive 25 per cent on the year before. The prices of southern yellow pine lumber in the US were up 24 per cent in March 2011 over same period last year. Prices were also up substantially for Spruce Pine Fur lumber in Canada.

AAA was also keen to welcome the news that the price rises were also being seen in Canada, and, much like the US, the western provinces saw prices rise much more sharply than the rest of the country.

"News that demand for timber is spreading from Asia to the US and Canada is extremely positive for alternative asset investors who were looking to make some health returns while diversifying their portfolio. This proves why alternative assets are such a good addition to any investment portfolio: while equities remain uncertain, timber prices are soaring," says Johnson.

Timber prices are forecast to continue to rise throughout the rest of 2011 in line with continued demand from China and expected demand from Japan following the devastating earthquake.

AAA is keen to promote investment in emerging markets like Brazil, where firms like Greenwood Management are offering investments in plantations of sustainable non-native species for export and charcoal production.

AAA is keen to promote investment in emerging markets like Brazil, where firms like Greenwood Management are offering investments in plantations of sustainable non-native species for export and charcoal production.

Like this article? Sign up to our free newsletter

Most Popular

Further Reading

Featured