Pine plantation investors gain interest in combined timber and oleoresin production outside China due to major market shifts
China once accounted for more than 70 percent of global exports of gum rosin, a product derived from tapping pine trees for oleoresin, within the multi-billion-dollar pine chemicals industry. However, this has changed in recent years. Lack of replanting, overly aggressive pine tree tapping for resin, and increased labors costs have set the nation back in the global markets for rosin and turpentine derived from pine oleoresin. These and other findings were just published in the Pine Plantations for Timber and Resin Production—new research from RISI, the leading information provider for the forest products industry.
China's exports of both gum rosin and gum turpentine plunged by nearly two-thirds between 2011 and 2015. During this transition, countries like Brazil and others—such as Mexico and Indonesia—are emerging and attracting new plantation investment projects focused on combined timber and oleoresin production.
"Timberland investors are gaining interest in developing new plantations for timber and oleoresin production even though global investment in new plantations has historically been focused on fast-growing hardwood species like eucalyptus. This is mainly because greenfield pine plantations producing both timber and oleoresin – in many cases – are seeing an IRR [internal rate of return] of up to 4 percent higher than timber-only plantations," said Bob Flynn, Director of International Timber at RISI and lead study author.
"New projects in Brazil make it likely that the country could surpass China as the major supplier of gum rosin and turpentine to global markets in the next several years. Brazil had already been attracting increased interest from timberland investors over the past several years, and potential partnerships with pine chemicals companies could be a new focus in Brazil. By selecting pine trees with higher resin yields, investors in Brazil and other emerging areas hope to further improve financial returns," continued Flynn.
Pine Plantation Investments for Resin and Timber explores this sector's potential through a detailed description of global pine plantation resources and forest owners, as well as a financial analysis of returns for pine plantations in China and Brazil. The study provides a background on trade trends for key products and the changing, global competitive environment for products derived from pine oleoresin.
Included in Pine Plantation Investments for Resin and Timber:
- Country summaries for regions with high production activity of both pine oleoresin and tall oil
- Five-year pulpwood market outlook on demand, supply and pricing
- Overview of trends in global trade of key pine resin derived products, including gum rosin, turpentine and tall oil
- Details of the global pine plantation resource base, focused on key species for resin production, area of plantations by country, major owners and trends in plantation area
- Review of silviculture and tree breeding factors that can improve the economics of planting pine for production of resin and timber
- Analysis of returns for pine plantation investment in China and Brazil, and discussion of the best investment opportunities in a combined resin and timber plantation
- History of price trends for crude resin, gum rosin, turpentine and tall oil
