Analysts differ in their assessments of the prospects for supplies of lumber abroad
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Supplies of lumber from Russia abroad, according to Roslesinforg’s forecast, will grow at a rate of 2–5% in the next three years. To do this, Russia needs to diversify its export supplies, while maintaining a high level of shipments to China. However, other market participants expect exports to fall this year and do not see significant prospects for further growth given current prices and low demand.
Timber exports from Russia may grow by 2–5% per year until 2025, Roslesinforg predicts. In 2023, according to experts, supplies could increase by 15%, to 27 million cubic meters (in 2022 the figure was 23.4 million cubic meters, which is 22% lower than 2021).
“The dynamics of supplies allows us to predict the stability of timber exports from Russia, but in order to maintain and increase volumes, Russian companies need to develop supplies not only to China, but also to other Asian and African markets,” the agency explained to Kommersant. At the same time, as Roslesinforg suggests, in the long term, the priority export markets for Russian timber may change due to the transition of the largest buyer of Russian lumber products – China – to self-sufficiency.
Experts suggest that at the same time, with a high degree of probability, it is possible to predict an increase in export supplies to the countries of Southeast Asia – first of all, the focus will be on Malaysia, Thailand, the Philippines and Vietnam. Roslesinforg notes that wood exports to India, Turkey, Malaysia, and Thailand have already increased by almost two and a half times compared to the same period last year: from 83.9 thousand to 197.23 thousand cubic meters. The largest increase was in Malaysia, Thailand and Turkey – three times; India showed an increase in lumber purchases by 19%.
Experts suggest that the main buyers of lumber from the Russian Federation in the next five to ten years will be India, Southeast Asian countries, Turkey and non-EU European countries, as well as countries in Africa, the Middle East and China, imports of which will remain at a consistently high level. The company notes that expanding the geography and increasing the volume of supplies should be facilitated by the development of direct transport corridors, curbing the growth rate of production costs, as well as expanding the range of supplied goods.
Other market participants are not so optimistic. According to WhatWood, in the first half of the year, lumber production in Russia decreased by 9.5%, to 18.65 million cubic meters, and lumber exports are declining at a faster rate. Thus, in January-July it amounted to 12.2 million cubic meters (a decrease of 19% year on year).
Key companies in the sector did not comment on the situation. But Russia’s largest timber company, Segezha Group, in its reporting for the second quarter, estimated the decline in lumber production in the Russian Federation for the first half of the year at 11%, and the decline in exports at 15%. The determining influence on supplies abroad was exerted by low demand and prices, the closure of certain markets for Russian companies, problems with shipment by rail for sawmills in the North-West, as well as a shortage of raw materials. “Due to stagnation in lumber consumption, high inventories were formed in the ports of China: in the second quarter, stocks in the port of Taican (the main port for the import of lumber from the Russian Federation) remained at a historically record level of 1.7 million cubic meters, which is 25% higher than the same period 2022,” the report said. The increase in runoff against the backdrop of low construction activity and limited demand from furniture and building materials manufacturers led to a correction in market prices from April 2023.
As Andrei Frolov, vice-president of the Union of Timber Industrialists and Timber Exporters, explained to Kommersant, the lumber market is still in a difficult situation. According to him, overstocking in China remains, and against the backdrop of low construction rates, one should not expect an increase in demand. In another major sales market, Egypt, according to him, problems with solvency remain and debt to suppliers for goods already shipped is growing. Low demand is observed from Algeria and Tunisia, as well as Central Asian countries. Attempts to increase supplies to India will be hampered by high logistics costs, which make most shipments unprofitable at current prices. According to Andrei Frolov, the prospects for the lumber market are connected with supplies to new Russian regions, where construction will be actively carried out.
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