A play on Chinese timber

The timber industry has recently been getting more and more attention as an alternative investment at pension funds and university endowments. In light of this interest, the Red Cat Journal highlights one Chinese timber play: Sino-Forest. Although Sino-Forest’s operations are mainly in southern and eastern China, the company is a Canadian corporation and was started in 1994. The company had 352,000 hectares of forestry plantations at the end of last year and is listed on the Toronto stock exchange under the ticker symbol TRE.TO.

Going forward, the potential positives for the Chinese forestry industry include:

  • Demand growth of 10% per year is likely as China’s furniture industry remains strong and the further development of the pulp and paper industry underlies demand for wood.
  • China imported over 20% of the logs consumed in China during 2006, mostly from Russia. Russia looks set to increase its export tax on logs, which could reduce Russian imports into China, increasing demand for domestic logs.
  • A crackdown on illegal logging in Indonesia could further disrupt international log supply.
  • The Chinese government is implementing new policies to increase forestry industry returns, including lower forestry taxes and interest-subsidized loans.

You can find out more about the company by visiting their website: www.sinoforest.com.