Uruguay wood exports seen headed for record on Asia demand

Uruguay’s wood exports could hit a record this year with Asian countries buying more wood at higher prices as the global recovery takes hold, according to one of the country’s biggest forestry companies.

Agroempresa Forestal exported about 160,000 cubic meters of Uruguayan pine and eucalyptus logs this year through mid-May, Director Francisco Bonino said in an interview. The company, which manages about $880 million in forestry assets in Uruguay, Chile and Brazil, could ship a similar amount from the country later in the year if Asian demand remains firm, he said.

“Today the price of a pine log in China is 40% above last year and maybe 50% to 60% more than two years ago,” Bonino said. “In the case of eucalyptus it’s probably around 10% higher than last year.”

India and China are steady buyers of pine logs for their construction industries. At the same time, China and Southeast Asian nations such as Vietnam are importing more eucalyptus to make plywood and furniture for the U.S. and Europe.

China’s decision last year to ban log imports from several Australian states has also benefited Uruguay, whose wood exports almost doubled to more than $185 million in the four months ending April. China is paying as much as $160 per cubic meter for Uruguayan pine logs and as much as $200 per cubic meter for eucalyptus, said Bonino, who said prices might pull back later in the year.

Bonino said the Covid-19 outbreak sweeping through India and higher shipping costs, which have tripled in the last year, are potential headwinds.

Still, a bullish long-term outlook for wood has prompted Bonino to revive mothballed plans to create a timberland fund that would raise an undisclosed amount of money to buy or develop forestry projects in the region. Bonino is no stranger to tapping institutional investors, having sponsored four publicly listed timberland trusts that raised $640 million on Uruguay’s capital markets in the last decade.

“We want to do the fundraising during 2021,” he said. “Assets aren’t worth what they could be worth. We think it’s a good time to enter Latin America, picking the right countries and assets.”