Block Background

Russia’s Log Export Ban: How will it impact the global market?

A ban on the export of all softwood logs and high-value hardwood logs from Russia will begin in Jan 2022.

Russia’s aim is to stimulate the value-adding processing within Russia itself. This will hugely impact the Chinese market, as they import much of their softwood logs from Russia. Yet, the ban will also have a far-reaching knock-on impact on the global market.

 

Russian Forests

Russia’s natural forests account for 49% of the country and 23% of the world’s forests. An area of approximately 815 million hectares. So it is no surprise that they are one of the world’s largest log exporters. They provide 15% of the world’s global wood resources and this number is only growing. With their annual export of logs accounting for between 10-15% of the global total.

 

The Ban

The log export ban will begin in Jan 2022. It will ban the export of unprocessed logs including softwood, ash, maple, oak, and beech. Aiming to develop the Russian timber industry, by bringing in processing. There will be loans available for investment into domestic processing. It’s hoped these steps will prove encouraging for Russian businesses within the industry.

The ban will be teamed with actions to reduce illegal logging. Steps aimed to fight deforestation, and potential restrictions of the export of green lumber.

 

Benefits for Russia

The ban will ultimately mean processing is completed within Russian companies. Meaning more investment within the industry and more jobs. This move will give better oversight of logging within Russia, and the ability to trace wood sourcing. Plus, aid the steps to mitigate illegal logging within the country.

In recent years, exports of softwood logs fell by 18.8%. Maybe due to the gradual increase in export duties that Russia introduced. The duty this year is currently at 80%, yet average prices dropped by 3.8%. But, in the long term, the ban could mean improved cost competitiveness of Russian exports. Plus better market access for Russian wood products in developed regions.

Furthermore, the ban could mean dried lumber within Russia could increase. Lumber dried in Russian sawmills is currently around 20%. Whereas in the EU and US, this makes up 80-100% of exports.

 

Impact for China

The impact on China will be substantial. In 2019, 79% of Russia’s softwood export went to China. With pulp, paper, and sawmills dependent on this supply. The Russian export ban will force China to source their wood from other parts of the world. Including Europe, Oceana, and the US.

China has begun importing from places like New Zealand, yet, 10% of their softwood imports are still coming from Russia. As an alternative, some have suggested China may begin importing lumber as opposed to softwood logs.

Affects will also be felt in other industries. Currently, transportation of logs, from Russia, is by train. The ban will change this and will impact stakeholders within the railway industry.

 

The Global Impact

For the rest of the world, there will be further implications. With China unable to import from Russia, they will import from elsewhere. However, this will increase the global demand, and cause more strain on the wood industry. Causing a further increase in prices and even longer lead times. Meaning these already struggling markets will suffer further.

The ban could provide some opportunity for the EU and US to export lumber to China. Or even the investment into kiln-dried lumber. But this is dependent on whether China creates demand for these products. Plus the willingness and ability for further investment into these markets.

 

Conclusions

With this export ban, Russia is looking at the long-term implications. Investing into processing within their country and aiming to mitigate illegal logging. With the aim of Russian timber production competing in the global market.

However, the timing of this ban isn’t ideal. Since there is already a huge issue with supply and demand within the industry. Shipping costs are at an all-time high. Plus lead times are longer than ever before and there is no sign of recovery anytime soon. The Russian ban will make it even harder for people within the industry to afford, and get timber.

 

Our Solution

At Think Timber, we are aware of the intense pressure the industry is facing. With manufacturers, suppliers, and contractors all facing increasing prices and short supply.

Innovation and reactivity are key. Especially when things are changing so quickly. Our engineered timber provides an alternative to traditional solid wood. Whilst capturing the majority of the benefits that solid timber has to offer. Enquire about engineered wood for more information.

To discuss the Russian ban on log exports, the impact of this, and how we can help with your timber supply, get in touch at hello@thinktimber.co.uk

 

Resources used:

Forest 2 Market 

Lesprom 

Margules Groome