Masonite Siding on chimney is rotting because of excess moisture.

I have a wood frame chimney with Masonite siding enclosing a prefabricated wood burning fireplace chimney. The siding is swelled at the bottom edge at best and further rotting is evident. The chimney is external to the rest of the house. The chimney rests on a cement block wall. Only the siding on the three sides of the chimney show this rotting all the way to the top. The chimney cap appears to be fine. The rest of the house siding is fine. The tri-level house was built in 1978. I live in northwest IA.

What caused this condition and what do I need to do to correct the condition?

Thank you
Tim Nensel