10th global log & lumber conference

Russia is lacking log wood

Article by Gerd Ebner (translated by Eva Guzely) | 25.06.2020 - 10:09

For the Russian timber industry, 2020 is completely different than previous years. A very warm and wet autumn 2019 was followed by “no winter”. Many sawmills had to drastically curtail production due to the difficulties in log harvesting, while others sent their workers off to “summer break” in winter.

As a result of shipments from Europe, the price difference between high-grade and low-grade is getting bigger and bigger in China.

Alexander Aleksin

Fight against illegal logging


Russian softwood lumber exports to the most important global markets: In China (brown), Russia recorded increases, while it remained stable at a high level on almost all other markets (e.g. Europe (yellow)) © FEA, Wood Markets Monthly

In the future, the Russian government wants to increase its efforts in the fight against illegal logging, which affects Siberia and the Far East in particular. “This is going to lead to short-term disruptions in log trade,” predicts Aleksin. Softwood lumber exports are still going well. Aleksin proudly mentioned the fact that Russia maintained its market share on all global markets in the past few years, and even managed to considerably raise it in China (see chart below). Russia already satisfies 60% of China’s softwood lumber demand.

“China is a challenge which you have to accept because it is the strongest growth market in the world,” analyzed Aleksin. Europe is of increasing importance for Chinese supply. Swedish, German, Ukrainian and Belarusian exports in particular are growing. However, those countries mainly supply low-grade assortments.

Pressure on prices of lower qualities

As with low-grade qualities, Russia feels the European competition. So far, there was a price difference of around 30 US-$/m³ between saw-falling and 5th grade (nordic 6th grade) in every Chinese port. Now, there is a difference of 40/45 US-$/m³. In China, pressure is particularly high with redwood, which includes the North American SPF supply. According to Aleksin, pressure is going to increase. The northwest of Russia was hit hard by container freight costs rising from around US-$ 1700 in February to a maximum of US-$ 2500. This was only partly compensated with increases in prices from March to April.

Egypt more and more volatile

Egypt imports “only” 3 million m³ of softwood lumber a year. Nonetheless, the country is crucial for Finland, Sweden and Russia because of its “fixation” with redwood. Aleksin repeatedly sees demand windows opening in Egypt, which are there only for two weeks. This is what makes Egypt such a challenging market.

In 2020, Europe is much more stable. Aleksin hopes that there will be a higher softwood lumber demand after the recovery from the COVID-19 crisis.