Timber Price Increases

Timber is classed as a commodity and just like any other commodity the price fluctuates which is dictated by the laws of supply and demand. Right now there are some large timber increases feeding their way through to us and it is inevitable that products made from timber will see a price increase sooner rather than later.

Timber grew steadily in price from about 1850 through to the 1950's. It then remained relatively flat until a surge in price in the late 1970's. The price fell back to the 1950's level during the 1980's and have now returned to their highest level.

So what has happened to lead to timber price increases?

Russia has the largest softwood timber reserves in the world. The mills in Russia and the infrastructure around them have lacked investment resulting in many of the mills being beyond economic return.

The Scandanavian mills have also cut back. The consequence has been a lowering of timber stocks available. The forest owners have also become worried that if there is too much timber around they will see their returns devaluing and have simply stopped or reduced production.

At the beginning of 2009 demand was very strong, in particular from the Middle East and Africa. With stocks in the UK at an all time low it is not surprising that demand has outstripped supply.

As demand has increased, production of timber has been artificially cut back in the large forests of Russia and Scandinavia. This means manufactuers have to pay more for the timber in order to acquire a supply. The forest owners are therefore happy that they are receiving more for their raw material and also if you are not cutting down trees, more trees are allowed to mature longer giving a thicker trunk which makes the tree more valuable for the forest owners.

As far as the forest owners are concerned they cant lose. By maintaining a monopoly the forest owners can dictate the price in spite of an economic downturn.

In layman terms the forest owners are simply sitting back and withholding large tracts of timber. They are seeing their forests gain in value and they can demand a higher price for their timber. Good news for the forest owners but im afraid bad news for those wanting timber products for their garden.

Put simply if you want to save some hard earmed cash and if you are wanting to buy some garden products order now before the price rises start to feed through to us retailers. That coupled with the VAT hike from 1 January 2010 will mean there are double savings to be made from elbec garden buildings when you order in December.