Sustainable Forestry

FIM TIMBER INDEX

The FIM Timber Index is up 14% in the year to September 2011, marking the second successive year of significant price growth.

Timber prices remain however well below their mid 1990s peak, some 22% in nominal terms and some 47% in real terms.

The FIM Timber Index uses statistics published by the Forestry Commission (FC). It comprises an equal weighting of the Coniferous Standing Sales Price Index (CSSPI), being the average price of standing conifer timber sales and the Softwood Sawlog Price Index (SSPI), being the average price of all softwood sawlogs sold on the FC estate.

Timber Prices

FIM believes rising demand, combined with constraints on supply, has the potential to drive UK and global timber prices significantly higher compared with current levels and in particular that the following factors will drive timber pricing in the next decade and could lead to a global re-rating of timber and forest values:

  • Population growth combined with rising GDP per capita, which is closely correlated to timber consumption, in the BRIC (Brazilian, Russian, Indian and Chinese) economies, particularly China, will be the key driver of demand.

  • The economics of supply will be impacted by the cost of accessing increasingly remote forests. Environmental concerns will reduce illegal logging, slow destruction of primary forest and maximise carbon storage, further constraining supply.

In the short term, FIM believes that timber prices will recover from recent declines to reach pre-recession levels as demand rises due to:

  • A revival in housing starts in the developed economies. UK and US housing starts remain depressed, having failed to substantially recover from the historically low levels seen in 2009.

  • New uses relating to the production of energy, particularly from biomass and the drive towards wood based, zero carbon housing, creating new demand.