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Russian timber industry exported 13 million cubic meters of sawn timber and round timber in January–July 2024. This follows from data from Roslesinforg (the forest inventory organization of Rosleskhoz), which Vedomosti has reviewed. This value is 4% less than in the same period last year. No separate data on round timber and sawn timber for the reporting period are provided.

Domestic enterprises mainly supply boards and beams made of coniferous trees abroad, which are used in construction. Round timber is used as raw material for the production of sawn timber.

Since January 1, 2022, a ban on the export of round timber (unprocessed wood) of coniferous and valuable deciduous trees has been in effect in Russia. The authorities justified its introduction by the need to stimulate wood processing within the country. As a result, the export of round timber from Russia in the year after the ban was introduced, as reported by Roslesinforg, fell by 70% compared to 2021 to 3.8 million tons. The organization does not provide data for 2023 separately for round timber. In general, for two types of products - sawn timber and round timber (valuable deciduous trees) - exports last year decreased by 7% to 25 million cubic meters.

Over the seven months of 2024, more than half of all exports, or 7.4 million cubic meters, traditionally went to China – 4% less than was delivered in the same period last year. Uzbekistan was at the second place in purchasing lightly processed and unprocessed timber from Russia – 1.1 million cubic meters, and Kazakhstan was at the third place with 481,400 cubic meters. Deliveries to these two countries remained at last year’s level, according to Roslesinforg data.

The decline in exports to China is due to "difficulties in the banking sector," explained a representative of Roslesinforg. Sales of sawn timber and round timber on this market brought the Russian budget $1.5 billion during the reporting period - 1% less than a year earlier.

The main Chinese bank for Russian importers, Zhejiang Chouzhou Commercial Bank, stopped all settlements with Russia at the beginning of 2024. Later it became known that domestic companies cannot make payments through VTB Shanghai either.

Export of Timber from Russia in million qubic meters 

2021	2022	2023	2024 ( forecast)
30,5	23,0	20,7	17,0

Source: Roslesinforg

According to the consulting company Strategy Partners, in the first half of 2024, average import prices for lumber on the Chinese market will remain at the level of last year – about $205 per 1 cubic meter.

The decline in Russian exports was mitigated by deliveries to new markets – the Middle East and North Africa, according to Roslesinforg data. In total, they amounted to 1.08 million cubic meters (+3% year-on-year). Egypt became the leader in terms of purchases in the region, increasing imports by 15% over the reporting period to 343,000 cubic meters. Iraq showed significant growth – Russian deliveries there increased by 28% to 121,100 cubic meters. Exports to Afghanistan and Tunisia almost doubled, to Jordan – by 70%, to the UAE – by 10%.

In addition, sales to South and Southeast Asia increased by 28% year-on-year over the seven months and amounted to 90,400 cubic meters. Vietnam remains the largest market in this macro-region for Russian exporters with a volume of 57,300 cubic meters per year, which corresponds to the 2023 level. The main growth in this direction was provided by India, which increased exports from Russia by 3.3 times to 29,700 cubic meters.

A negative trend in the export of Russian forest products has been observed for the second year in a row. Difficulties for Russian companies began after the loss of their main sales market - the European Union, recalls NRA( National Rating Agency) Managing Director Sergei Grishunin. For comparison: the total export of sawn timber from Russia in 2021 was at the level of 30 million cubic meters.

Products of the Russian timber industry complex fell under European sanctions one and a half months after the start of the SVO in Ukraine. The EU banned the import of timber, plywood, wood boards and pellets from Russia.

The largest Russian exporters of sawn timber include: Segezha Group, ULK, Vologodskie Lesopromyshlenniki, Ilim, Lesresurs-Rusforest, Luzales, Terneyles and Kraslesinvest. Vedomosti sent questions to these companies and the Ministry of Industry and Trade.

China remains an important, but not the only strategic market for the Russian forestry complex, says Dmitry Beresnev, Vice President for Commercial Activities at Segezha Group. According to him, in addition to difficulties in mutual settlements, the decline in exports there is affected by infrastructure restrictions on the Eastern Polygon of railways (Baikal-Amur and Trans-Siberian Railways). Loading of timber cargo on the Russian Railways network in January-August 2024 decreased by 2% to 18 million tons, according to the company's data.

These factors have led to a redistribution of commodity flows to new markets, including domestic ones, Beresnev continues. At the same time, the profitability of supplies depends on the type of wood, he explains. Thus, the Russian market has become key for planed lumber (finishing material in construction - slats, baseboards, etc.), and lumber from Angara pine is in demand in the Middle East and North Africa, the interlocutor added.

The decline in lumber supplies to China is due to the crisis in the country's construction sector, says Lyudmila Rokotyanskaya, an expert on the stock market at BCS World of Investments. According to China Real Estate Information, in August 2024, the amount of transactions in the Chinese real estate market amounted to 100 billion yuan (-10% year-on-year). The PRC economy as a whole is recovering more slowly than expected after COVID, she noted.

The volume of new housing sales in China in the first half of 2024 was a quarter lower than in the same period of 2023, says Valentin Gavrilov, director of the Strategy Partners timber industry practice. Since the beginning of the year, the total import of sawn timber to the Chinese market, according to his estimates, has decreased by 2%.

Exports of sawn timber (excluding round timber) from Russia by the end of 2024 will amount to about 17.5 million cubic meters, NRA predicts. This is 10% lower than in 2023 and 20% lower than in 2022. The crisis in the Russian forest industry continues, Grishunin states. In his opinion, the domestic market is not able to replace lost export volumes and companies are forced to sell products in low-margin markets, where logistics and duties significantly reduce profits.

Source: https://www.vedomosti.ru/business/articles/2024/09/11/1061430-rossiya-prodolzhaet-snizhat-obemi-eksporta-drevesini?utm_campaign=newspaper_11_9_2024&utm_medium=email&utm_source=vedomosti