Sanctions against Russian exports will permanently alter the global trade of forest products

STOCKHOLM, April 12, 2022 /PRNewswire/ -- Lumber trade flows changed almost instantly when Russia invaded Ukraine in late February. Trade sanctions and restrictions in financial transactions by Europe, North America, and major markets in Asia halted shipments from Russia and Belarus. In addition, exports from Ukraine were also disrupted. The total lumber exports from the three countries in the war zone were 34 million m³ in 2021. Over 25% of that volume was exported to countries with current sanctions against Russia and Belarus. In addition, the two major wood certification organisations, FSC and PEFC, have labeled all timber from the two countries as "conflict timber." The removal of the labeling means that the timber cannot be used in certified products, which will impact any country buying wood from Russia and Belarus and manufacturing certified products, e.g., lumber, plywood, pulp, and paper for sales worldwide.

The total volume of softwood lumber that is now unlikely to reach the market in Europe and Asia (outside China) because of sanctions is an estimated 10 million m³, or just over 30% of the total export volume shipped from Belarus, Russia, and Ukraine in 2021, reports the Wood Resource Quarterly. In addition, lumber sold to customers in China that require certified wood for manufacturing forest products targeting Europe and North America will no longer be available from Russia. Europe, which imported 8.5 million m³ of softwood lumber from the three countries in 2021, will be the hardest hit, as the lumber import volume accounted for close to 10 percent of the total consumption on the continent in 2021.

Although the Chinese government has not set up any barriers to trade between them and Russia, it is still conceivable that there will be interruptions in shipments between the two neighbors. Some of the factors that may reduce trade even with countries that have no sanctions with Russia and Belarus include:

• Foreign investors in the Russian forest industry may withdraw their presence and financial funding, making it more challenging to produce and export to any market.
• A weak Russian Rouble (down over 20% in three weeks since the war started) will make importing equipment and spare parts for logging companies and forest product manufacturers very costly.
• The removal of Russian banks from the international payment transaction system SWIFT will complicate payments for exported Russian products and imports of most equipment for the forest industry, from timber harvesters and forwarders to machinery for sawmills, plywood mills, and pulp mills.
• Russian manufacturers of pulp, paper, plywood, and lumber can no longer offer PEFC or FSC certified products.

Global trade flows of forest products have already changed significantly and will continue to change due to the Russian invasion of Ukraine. Even when peace is ultimately reached, it is improbable that trade will revert to pre-war patterns.

Are you interested in the worldwide wood products market information? The Wood Resource Quarterly is a 75-page quarterly report established in 1988 and has subscribers in over 30 countries. The publication tracks prices for sawlog, pulpwood, lumber, and pellets and reports on trade and wood market developments in key regions worldwide. For more insights on the latest international forest product market trends, please visit www.WoodPrices.com

CONTACT:

Wood Resources International LLC
Hakan Ekstrom
[email protected]
www.woodprices.com

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SOURCE Wood Resources International LLC