Is brown the new black gold?

If financial analysts are to be believed, top timber traders 10 years from now could be swaggering around like JR Ewing. A recent Times article said that these banking crystal ball gazers are putting their money on a steep rise in wood prices over the next decade. In fact, the piece was headlined, “It was dead wood, now lumber is the new oil”. One bullish forecaster predicts a hike of 300% and, on the back of such projections, others are reappraising their outlook for major wood producing countries.

“We had said Canada was moving from a nation of hewers of wood to a nation of bankers and real estate agents,” David Watt of Royal Bank of Canada is quoted as saying. “That might have been premature. Lumber might be the next decade’s oil.”

The big driver for timber prices, according to the forecasters, will be demand from the emerging industrial giants, notably China. With 20 million rural Chinese moving to towns every year, the country is embarking on a colossal housebuilding programme. This will suck in millions of cubic metres of structural timber, not to mention the wood needed for furniture and interiors. That, of course, is on top of the material China already imports to make goods for export.

Throw in similar trends in Brazil, India and Russia and you get the picture.

Even if the 300% increase is seen as extreme, the consensus is that the only way for timber prices in the future is up, with wood fuel demand adding further market pressure. Cue a spate of other financial page articles recently on investing in forestry.

The pessimistic timber sector conclusion from all this is that, while the big players stand to benefit from surging global consumption, other traders may be priced off the market. But the positive outlook is that, not only will more wood be grown to help meet demand, the industry will be able to persuade end users and consumers to pay more for it as they increasingly favour sustainable products and materials.

And the good news on this last front is that this persuasion process in the UK is stepping up a notch right now with the very welcome relaunch of the wood for good campaign. The core message of the reinvigorated promotion is that wood costs the planet less. Convince people of that, and they’re far more likely to accept that it has to cost them more.