Feb 19, 2008. /Lesprom.com/. South African prices of structural timber and other forestry products are expected to increase sharply following a proposal by state-owned forestry operator Komatiland for a 36% increase in saw log prices for its long-term contract holders. Komatiland supplies 35%- 40% of the saw logs used in the South African lumber industry, but its annual price increases are a widely accepted benchmark. Other log suppliers are expected to follow suit. Komatiland, the single biggest forestry entity in SA, operates 18 commercial plantations on 187 320 ha of land. Kobus Breed, Komatiland CEO said the price increase - intended for April 1 - was due to the continued strong demand for timber and a reduced timber supply caused by fires last year, which destroyed about 5% of the country's timber plantations. Kobus Breed also said the proposed increases were in line with Komatiland's intention to narrow the gap between long-term contract prices and open-market bids, which are traditionally higher. Industry observers say if Komatiland does not adjust prices to achieve parity between long-term and spot buyers, the gap would be about 35%, which was a significant barrier to entry for emerging businesses. A 36% increase, as proposed, would close the gap to about 14%. The industry expects another saw-log price increase later this year as Komatiland tries to close the remainder of the gap. Komatiland Forests owns and manages the prime softwood saw log forestry assets in the Mpumalanga, Limpopo and KwaZulu-Natal provinces of South Africa.