Lumber exports to the East are growing amid falling prices

Russian lumber producers reduced their export supplies in the first half of the year, but are trying to compensate for the loss of the European market by increasing supplies to China and the Middle East. Prices for Russian sawn timber in target markets fell by more than 25% yoy by mid-summer, but the weakening of the ruble and cheaper logistics partly mitigate this effect for exporters. In the domestic market, manufacturers are trying to keep prices down and gradually increase the volume of deliveries.

Lumber prices in China, the main export market for Russia, are on the verge of profitability, and for many companies they are already below this level, according to the WhatWood report. In June, the price of rough natural moisture lumber from pine for delivery to China fell by 24.1% yoy and by 4.3% versus May, to $220 per cubic meter on an FCA Novorossiysk basis. Unplaned spruce lumber lost 32.1% and 5%, respectively, to $190/m3.

Lumber prices continue to decline in other export markets as well. Thus, in June the price of Russian unplaned natural moisture lumber from pine fell most of all in Egypt — by 42.4% yoy and by 13.6% compared to May, to $190 per cubic meter on an FCA Novorossiysk basis. This is due to the rather slow recovery of the construction sector and the still high level of stocks. Despite falling prices, the significant weakening of the ruble against the dollar and the yuan in recent months has helped Russian exporters.

In general, the export of sawn timber from Russia in January-May, according to WhatWood’s preliminary estimate, fell by 21%, to 8.4 million cubic meters. Lumber exports from Russia to China in May increased year on year by 4.2%, to 1.3 million cubic meters, in January-May – by 2%, to 5.9 million cubic meters. For comparison, deliveries to Egypt in May reached the maximum level since November 2022 (58.1 thousand cubic meters), but in general in January-May they fell by 41%, to 173 thousand cubic meters.

The fall in export prices is partly mitigated by improved logistics, both by rail through the Eastern Polygon and by sea. The cost of delivery from the North-West of the Russian Federation to China is now about $30 per cubic meter. Subsidies received by Chinese operators, as well as improved conditions for the reloading of containers sent to China, have reduced rates in this direction. There is also an increase in the level of availability of wagons, the report says.

In Russia, the season of active construction began in March, but the price dynamics is multidirectional. For example, the average wholesale price on the basis of the FCA of the Vologda region for a six-meter unplaned spruce board 50 by 150 mm has remained unchanged for the last four months – 13 thousand rubles. per cubic meter. In Central Russia and the Volga region, prices are rising and have increased by 2–2.5 thousand rubles since the beginning of spring. per cubic meter. At the same time, experts do not see price changes in the retail market.

The construction season is now in full swing, so the demand for lumber is growing in the country, Roslesinforge notes. They estimate the production of lumber in the Russian Federation in the first half of the year at 14 million cubic meters, of which 42% is for sawlogs, and approximately 25% is for materials for the production of various boards, including fiberboard and chipboard. Since the beginning of the construction season, the production of chipboard has been growing monthly by about 3-6% and has already exceeded 5 million standard cubic meters, Roslesinforge says. They also see a monthly increase in plywood output by about 0.5-1%, in general, over the six months, its output approached 2 million cubic meters. The increase in output in Roslesinforge is associated precisely with an increase in domestic demand, noting that the domestic market is becoming more and more important for local producers. At the end of the year, Roslesinforg expects production growth in the timber industry sector at a rate comparable to the overall growth in industrial production – about 3%.

Olga Mordyushenko