Timber harvesting in Russia may exceed the 2022 result

Timber harvesting in Russia is gradually recovering and, according to the forecast of Roslesinforg, may grow by almost 3% by the end of the year. Based on the results of January-August, the decrease compared to last year was 7%, while in August procurement increased by 5% compared to July. Kommersant’s interlocutors in the industry confirm that the demand for raw materials from large holdings is growing, but problems with LesEGAIS and rising costs of work against the backdrop of slowly rising prices still have a negative impact on the pace of procurement.

In Russia, a decline in logging volumes is observed. According to Roslesinforg, in January-August it decreased by 7% compared to the same period last year, to 112.9 million cubic meters. At the same time, in August production increased by 5% compared to July. The company explains the gradual growth by increased activity in Siberia, the North-West and the Volga region.

In general, according to Roslesinforg, procurement volumes have steadily grown by an average of 2% per month since April, when procurement activity decreases significantly compared to the cold months of the year. Roslesinforg predicts that if in the coming months the gap with last year’s figures narrows at the same pace, then by the end of the year the volume of wood harvesting will be about 200 million cubic meters, which will be 2.8% higher than the level of 2022. Chairman of the Timber Industry Committee of the Legislative Assembly of the Arkhangelsk Region, Alexander Dyatlov, predicts that logging in the region at the end of the year will amount to 12.7 million cubic meters, which is almost 10% lower than last year.

As calculated in Roslesinforg, about 23% of the felled forest is used for pulping, 36% is used for the production of plywood, chipboard and other board materials, 22% is used for lumber, 13% is used for heating, and from the remaining volume other wood products are made.

As Roslesinforg director Pavel Chashchin notes, Russia “can cut more than it does now.” He recalls that in 2022, despite sanctions, the export of wood pulp (a semi-finished product for making paper) increased by 15.2% and entered the top 7 Russian goods that demonstrated the greatest export growth compared to 2021.

Kommersant’s interlocutors in the industry complain about a number of problems that make it difficult to increase harvesting, one of which is the unstable operation of the LesEGAIS electronic timber turnover system. As interlocutors in several forestry companies note, it is impossible to issue accompanying documents (ESD) within 24 hours. “The system has been down for a day. During this time, we were unable to send 150 wagons of timber to suppliers, which is 9 thousand cubic meters of timber. Some of the products were not transported from the cutting sites to the lower warehouses. Such supply disruptions increase the cost of production with all the ensuing consequences,” notes Kommersant’s interlocutor. Another Kommersant source confirms that the balance system often does not work correctly, including in offline mode, when it is necessary to ship wood through an intermediate point.

Some companies also note that logging volumes are being pressured by low demand for products and an increase in production costs by almost 30%, taking into account the devaluation and rise in prices of fuels and lubricants, spare parts and depreciation for equipment, as well as rent for plots. “The cost of new machines, both forestry and road, even Russian-made, has doubled in rubles,” says Kommersant’s interlocutor. At the same time, prices for round timber have increased slightly – by 10-15% on average in the market, he notes, and large timber industry holdings have slightly raised their production plans and are “providing good volumes.”

Deputy Chairman of the State Duma Committee on Industry and Trade, President of the Association of Organizations and Enterprises of the Pulp and Paper Industry, Alexander Spiridonov, notes that now, due to the reorientation of supplies from Europe to Asia, the domestic market has become the main market for the timber industry. “Not all Russian producers were able to find consumers for their products in Asian markets, not all were able to meet the price, which affected the volume of raw material consumption and led to a decrease in logging,” he says. Mr. Spiridonov recalls that the government is stimulating domestic demand through programs for wooden construction, the transition to wood fuel, as well as fiber materials for the food industry. At the same time, Mr. Spiridonov says, in the processing industry there will continue to be difficulties with the necessary equipment, spare parts, consumables, chemicals and import substitution in these areas.

Olga Mordyushenko