Why does timber prices rise?

August 5, 2010 by timbercommunity

Swedish media write that Timber prices are increasing, but there are both winners and losers when the wood from Swedish forests are becoming more expensive. For several years the price of timber fell. But today the forest is not just boards and paper pulp, biofuel is a growing percentage. And that could mean a new trend in timber prices. 

Swedish Radio recently wrote an article where they explained the rise in wood prices.The price change means big money for the company that owns large areas of woodland. The Forest Company Södra earned 9 million SEK  first half of 2009.This year it has gone much better, says information director Per Braconier to the Swedish Radio.- "It is one of the strongest first halves in the history of Södra. We made a profit of 1.1 billion Swedish crowns. So it is a very strong economy in the pulp and a relatively short-term in lumber quot;says Per Braconier. The Swedish state is also among the winners, state owned Sveaskog doubled its profit for the first half compared with last year.

There is simply more timber to sawmills. We see an increasing demand for timber due to an increase in housing today"said Patric Sellin marketing manager to Swedish Radio.But of course there are losers.Michael Jåfs is an analyst at Credit Agricole Cheuvreux.A high price of wood is of course a cost, and the cost increase must be able to shovel on to the customers of the products. And this is a bit hard for many of our companies because after all there is an over-capacity"says Michael Jåfs to Swedish Radio.

The prices for sawlogs, pulpwood and biofuel account for the largest increases and two of the strongest markets are those in North Africa and Asia. Also in the US there is a rise in lumber prices but the trend to be reversing. It only took a small rise to deplete existing supplies,” Simonson said to Pittsburgh Business Times 23rd of July. Once housing construction went positive in May 2009, “that really pushed lumber prices through the proverbial roof.” Lumber and plywood prices increased almost 18 percent since June 2009 but shed 5 percent from their May figures.
 
Chicago Mercantile Exchange lumber futures
Chicago Mercantile Exchange lumber futures Tuesday pulled back from the 3 1/2-week high they set on Monday as fund-style buyers remained on the sidelines. Fundamentally, the market is weak, brokers and analysts said in an

Price development for Newsprint
Newsprint prices in Europe expected to remain at low levels while increasing in South America, Asia and Australasia. Higher magazine prices for large part of volumes 

Source: Riisi (published from Norske skog)