Timber ETFs: 5 Ways the Demand Picture is Shifting

November 12th at 3:00pm by Tom Lydon

ETF timber Economies around the world are stirring and they require basic materials to get them moving. Copper and steel are in demand, but timber exchange traded funds (ETFs) also stand to gain from the rebuilding efforts.

Some factors in favor of timber’s outlook include:

Leading indicators in the U.S. housing market are stabilizing and the recovery is being priced into the European and U.S. timber sector, reports David Campbell for Citywire. (Timber: A comeback story?)

The U.N. Economic Commission for Europe projected a surge in Chinese-led demand for timber next year. Production capacity has also tanked since many plants have closed during the recession. With capacity diminished, timber prices may continue to rise as demand increases and supply remains low.

Chinese President Hu Jintao expressed China’s interest in Malaysia’s palm oil and timber sectors as the two parties signed trade agreements, according to AFP.

Malaysian Prime Minister Najib Razak said that China “has an insatiable demand for natural resources to fuel its economic expansion.”

U.S. homebuilders received a lift yesterday as Toll Brothers (NYSE: TOL) reported that demand for new homes is increasing. The luxury builder said that contracts for new homes rose 42% in the fiscal fourth quarter, according to the Associated Press.

Najib also noted that President Hu remarked about China’s intention to increase the amount of trade with respect to palm oil and Malaysian timber. (Accessing the global recovery with timber ETFs).

For more information on the timber industry, visit our timber category.