Analysts expect sales of wood to gradually recover thanks to trade being redirected eastward
Foreign sales of Russian timber saw a further decline in the first quarter of this year, dropping more than 20% to 4.5 million cubic meters, according to the latest data by the Russian forest regulator, Roslesinforg, as quoted by Russian business daily Kommersant.
The drop is largely attributed to the sanctions that the EU introduced against Russia over its military operation in neighboring Ukraine. The bloc had previously been among the major importers of Russian timber.
According to the Federal Customs Service of Russia, in 2021, timber exports (including byproducts, such as birch logs, plywood logs, and fuel chips) to European countries amounted to roughly $504 million. More than half of the wood and timber exports went to Finland (around $374.5 million). Wood sales accounted for nearly 20% of Russia’s export shipments.
After July 10, however, when the embargo on imports of almost all output of the Russian forest sector came into force, sales to the EU gradually dropped to zero. Meanwhile, the US, Japan, and South Korea reduced purchases of Russian wood produce from January through March 2023 to around 271,600 cubic meters. Japan’s imports dropped 47.7%, while the US and South Korea slashed Russian wood imports by 40.3% and 18.7%, respectively.
Last year, Russian timber exports saw a major decline of 20.8% to 23.3 million cubic meters. Back then, more than half of the deliveries went to China. Despite the Covid-related drop in consumption by nearly 7%, the nation imported some 13 million cubic meters of Russian timber. Uzbekistan, the second largest buyer of Russian timber produce in 2022, imported 1.9 million cubic meters of sawn timber, flat versus the previous year.
China and Uzbekistan remained the largest importer of Russian timber in the first quarter of the current year, accounting for more than 74% of exports in total. China purchased 2.88 million cubic meters of wood, marking a modest year-on-year increase of 3.5%. Its share in Russia’s timber exports amounted to 63.6%, up from 48.6% in the same period the previous year. Meanwhile, Uzbekistan bought 480,000 cubic meters, 13.4% more than in the first quarter of 2022.
Exports of timber produce from Russia in 2023 will increase at least in monetary terms, according to the head of Roslesinforg Pavel Chashchin, who expects the profitability of export deliveries to surge due to the stabilization of the ruble and a jump in the share of high-margin products.
He also projects volumes of shipments to grow due to export flows being redirected eastward. He says that Russian producers will be able to replace the sanctions-related loss of markets before the end of the year, largely thanks to a resumption of deliveries to China from the seaports in northwest Russia, where the country’s largest timber-processing enterprises are located.
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