Block Background

How the war in Ukraine is set to affect the timber industry

Russian troops crossed the border into Ukraine in the latter half of February. With the invasion being globally broadcast from the beginning. Since then, troops have moved across the country making attempts to take control of cities.

These shocking actions have meant more than 11 million people have fled their homes. With 5 million of these people leaving the country and finding safety in neghbouring countries. This number includes innocent children, the elderly, and everyday people. Who have left their homes, schools, and families, and now only have a few possessions.

It’s very important for us at Think Timber to not forget that behind every business, are people. This is the case for those working in the timber industry within Ukraine. Individuals who we have personally met during our regular mill visits have paused their lives to fight.

The awful reality is that when the war is finally over, businesses won’t be able to turn the factory lights on and start machines again. There will be a long road to recovery, and Europe and the wider timber industry will certainly feel the ripple effect for a long time to come.

 

Ukrainian Timber Imports

 

With the conflict still ongoing, the CEI-Bois and the EOS have recognised that the Russian invasion of Ukraine poses a threat to not only peace and security in Europe, but also to the timber industry.

Ukraine has been labeled the ‘breadbasket of Europe’ as it has a wide range and plenty of raw materials. Although it takes some time for oak logs to dry, in a few months oak timber products from Ukraine will be zero.

Many countries within Europe rely heavily on Ukrainian timber. Italian companies that produce kitchens, German companies that buy finger jointed panels, and Danish furniture companies.

Because of supply issues and the volume that the Chinese market is purchasing is so high, oak products are in short supply anyway. But businesses right across Europe are feeling the effects of the halt in Ukrainian production. With this, prices are only set to rise.

 

Russian Belarusian Timber is now considered ‘Conflict Timber’

 

It is expected that there will be a ban on all wood products from Russia. Just like there has been with all products coming from Belarus into Europe.

Members also support the decision taken by the PEFC to classify wood products coming from Russia or Belarus as ‘conflict timber’. Meaning that it is ineligible for accreditation certification. So, any wood and forest products coming from these two countries are not able to be used in FSC products. Or sold as FSC certified anywhere in the world whilst the conflict in Ukraine continues.

 

Russian Timber Imports

 

The levels of Russian wood imports are also set to be affected by the war. Whereas Russian softwood imports to the UK were up in 2020 to 5%, levels of plywood imports were around double at 10%.

Russian timber makes up a large amount of the section of UK softwood, hardwood, and plywood imports, with a total of 456,810m³ imported last year alone.

It is thought that various industries could be negatively affected by the potential shortage. Especially the construction sector. As sawn timber is among the wood products which will be largely impacted by the shortage.

However, the CEI Bois and EOS are working closely with EU Governments and Institutions, to identify where measures can be put in place to mitigate the effects on the industry. Measures could include increasing the harvest rate and ensuring security. Plus,  ensuring certified wood products are being produced, and using repurposing available wood resources.

 

Increase in prices

 

Increases in the price of timber products are already being seen by those who are buying directly from the sources. But, unfortunately, this means that many businesses will have no choice but to pass on some of this increase to their customers. To ensure they can carry on working as a successful company.

We would strongly recommend that customers do not over-commit to long-term prices as this could result in issues down the line. With new import restrictions, the market is expected to see a shortage in softwood. Combined with the reduction in shipping capacity, and therefore an increase in price in freight costs, the industry could see a sharp and sudden rise in the costs of materials.

Even though supply exceeded demand in 2021 by around 1 million m3, which meant there was an overstocking problem. Normal stock levels are expected to return in April. This would be good news, if it weren’t for the expected shortages and increase in freight prices which a set to begin affecting manufacturing companies within the coming weeks. UK prices for MDF are jumping quickly, and other panel-based products like Ply & OSB are following suit.

Unfortunately, the days of traditional straightforward thinking and traditional pricing hierarchy of products have been turned on their head in the last few years.

 

How we can help 

 

At Think Timber, we are constantly monitoring the global situation. We’re working hard to ensure that all of our customers are using the right products based on the current market and global circumstances which could be affecting them. The source of the material and that regions/country’s current social and economic factors are now playing a huge part.

If you’d like to discuss how the recent conflicts in Ukraine are affecting the supply of timber products, please get in touch. Email us at hello@thinktimber.co.uk