Chinese Demand Squeezing Supply, Pushihg Timber Prices Higher In EU - FT

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According to the Office for National Statistics in the UK – a big importer – the inflation rate for wood products hit 13 per cent last month – its highest level for more than a decade. The British Timber Trade Federation estimates inflation was about 20 per cent last year, while dealers say the prices of sawn softwood have risen 30 per cent in the past six months.

Analysts say tracking price swings in timber is more difficult than in other commodities because the global forest products industry is fragmented and opaque. Timber is traded through bilateral deals rather than centralised trading platforms. But recent figures from the United Nations show that China has become “the number one importer of softwood and hardwood logs”.

“China seems to be consuming mind-boggling amounts of wood right now,” says David Sulman, of the Scottish Timber Trade Association. China used to be a relatively minor player in the global timber industry, but is now second only to the US as an importer. The rise in Chinese demand has had its biggest impact in Europe, because it comes at a time when Russian exports have been undercut by tax changes.

The mild winter also made it harder to extract logs in Scandinavian countries. Meanwhile, a mild spring in Europe has fuelled strong seasonal demand for timber from the construction sector – and from gardeners.

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http://www.ft.com/cms/s/a58e4910-f757-11db-86b0-000b5df10621.html