Benefiting from the recovery of the global economy, apart from the United States who has been buying wood crazily to meet construction needs, Asian countries such as China, India and Vietnam are also buying timber on an unprecedented scale. As a beneficiary country, Uruguay’s timber exports this year are expected to reach a record level.
Bloomberg quoted Francisco Bonino, head of Agroempresa Forestal, one of Uruguay’s forestry companies, as saying that the company exported about 160,000 cubic meters of Uruguayan pine and eucalyptus logs from the beginning of the year to mid-May. Currently, the company manages approximately US$880 million in forestry assets in Uruguay, Chile and Brazil. If demand in Asia remains strong, the company will continue to export timber of a similar scale in the second half of this year.
“At present, the price of pine in the Chinese market is 40% higher than last year, and perhaps 50% to 60% higher than two years ago.” Francisco Bonino said, “As far as eucalyptus is concerned, its price may also be approximately higher than last year. 10%.”
Asian buyers rush into timber soars, transportation costs triple
The construction industries in India and China are stable buyers of Uruguayan pine logs. At the same time, Southeast Asian countries such as China and Vietnam are importing eucalyptus to produce plywood and furniture for the United States and Europe.
One of the main reasons for the surge in Uruguay’s current round of timber exports is China’s decision last year to ban the import of logs from several states in Australia. In the first April of this year, Uruguayan timber exports almost doubled to more than US$185 million. Francisco Bonino stated that buyers from China are willing to buy Uruguayan pine logs at a price of US$160 per cubic meter, and they are also paying as much as US$200 per cubic meter for Uruguayan eucalyptus. But Bonino said that prices may fall back later this year.
In addition, Bonino also said that the coronavirus pandemic is raging in India, as well as the expensive transportation costs, which have tripled in the past year. These are potential obstacles.
Now is a good time to enter Latin America
Nevertheless, the long-term bullish outlook for timber has prompted Bonino to re-establish a storage plan for the establishment of a forest land fund, which will raise an undisclosed amount of funds for the purchase or development of forest land projects in the area.
Bonino is no stranger to attracting institutional investors. In the past ten years, he has raised US$640 million in the capital market of Uruguay, assisting the public listing of four forestland trusts.
“We hope to raise funds in 2021.” He said, “Current asset prices do not match their values. We think now is a good time to enter Latin America and choose the right countries and assets.”
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