• About
  • Forestry Investment
  • World Forestry Update
  • Archives
  • Categories
  • Timber markets strong

    2010 - 01.05

    Timber Investment news from New Zealands Timber Federation….A huge boom in China’s construction markets is cited as the main driver behind  increasing timber demand in New Zealand..According to the Federation, the cost of building timber in New Zealand will rise by up to 10 per cent,  due to extreme supply shortages and growing timber demand.

    The Chinese building regulations have recently changed policy to encourage the use of timber constructions for house building. With up to 20 million people migrating to the cities each year in China from the rural areas, this will certainly be placing a strain of the supply of lumber to the region with timber price rises almost invevitable.  A massive increase in log exports to China is underway….In 2007,  nearly 15 per cent of New Zealand logs went to China, this now stands at 60 per cent.

    The Federation goes on to say that substantial cuts in production as a result of plant closures have more than offset last years reduction in home building…….  quoting directly from the Federation.

    “Prices in both the domestic and export markets are now rising steadily with a number of price increases in the range of 5 per cent to 10 per cent already announced for the domestic market in February and March. Although export prices and margins have been squeezed by the exchange rate, export volumes have actually lifted by about 10 per cent as firms have chased cash to ease liquidity pressures. Lifting production would be difficult in the face of log shortages and expected tough economic conditions in the first half of this year. There is now a huge reliance on, and vulnerability to, China as a result of the biggest and fastest restructuring of our forestry trade in its entire statistical history.”

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    Your Reply