The timber market

Timber as raw materials

Timber rates second in raw materials per global turnover volume, with oil topping the chart.

However, there are a few differences between both raw materials:

-Timber is renewable; oil is not.
-Timber does not contaminate; oil does.
-There are a host of timber producers; oil is State-controlled and produced by a chosen few.

Given the global population increase and the implementation of and felling restrictions in native forests, the timber market has a strong potential.

Furthermore, this chart shows that timber prices have increased over the first three months of the year (31%).

Timber prices

Evolution in timber prices:

              

Source: Invertia

According to FAO*, despite all the forests that are being planted at present, in the near future there will be a timber deficit amounting to 500 million cubic metres.

This deficit will be caused by:

-Exponential demographic growth.

-Pressure from environmental activists to ban felling in native forests.

-High deforestation rate, which grows at an accumulative rate of 1.8% a year. The incorporation of China, India and other emerging markets to the global market.

According to the Chicago Mercantile Exchange, in the last 180 years, timber revaluation has exceeded all other raw material by 2%. On the other hand, the price per m3 for fine hardwood has also increased

The increase in the demand for fine hardwood, alongside the incorporation of emerging markets in growing geographical areas and the drop in international supply point to a strong increase in timber prices.

 

             

According to Wood Resources International** forecasts, the timber demand for industrial purposes will increase from 1,600 million cubic metres to 2,700 cubic metres in 2030 (1,600 conifers and the rest non-conifers).

The “developed countries” (Western Europe, North America and Japan) and the emerging economies in South East Asia and China will lead this increase in the demand for timber.

*FAO: Food and Agriculture Organization of the United Nations

** Wood Resources Internationa: An internationally recognized forest industry consulting firm.