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  • Archive for August, 2011

    China driving demand for forestry products claims expert


    2011 - 08.12

    The demand for timber is being boosted by the growth in China’s Gross Domestic Product, according to a new report from FIM services.

    The report argued that timber is increasingly a global market as countries like China and India joint the major markets for forestry products. Robert Daniell, a consultant at the firm, said, “Due to high freight costs, timber was usually shipped to only the nearest country in the past. But timberland is becoming an increasingly global market, spurred by growing demand particularly from the BRIC countries.”

    He added, “By 2015-16, China’s fibre gap, for example, is predicted to be equal to the equivalent of Canada’s 2009 total timber harvest.”

    In terms of investment, an article by Investment and Pension Europe (IPE) claims that timberland investments have outperformed commercial property, gilts and UK equities for the past ten years. This is based on figures from an IPD forestry index.

    The article continues to talk about the tax efficiency benefits of investing in forestry – there is no capital gains tax to pay on money made as a result of trees growing.

    Mr Daniell added that investing if forestry has the added bonus of being able to hold off on selling the asset if prices have fallen: “It is also an asset backed investment and in times of low timber prices you simply let the trees grow and harvest later.”

    He concluded that the outlook for timber is very positive as a result of the global boom in demand for commodities, particularly form emerging economies.