The Association of the German Furniture Industry is expecting a drastic decline in furniture exports to Russia. However, it is likely that many investments projects in the forest products manufacturing sector in Russia will grind to a halt as the growing list of sanctions and financial transaction restrictions take effect.Įurope– Companies in the European timber industry are increasingly deciding to suspend or restrict trade with Russia or to stop production in Russian plants. To meet increased global demand for forest products, the Russian government recently initiated programs to encourage investments in the sector to both expand/modernize existing manufacturing plants and build greenfield facilities. Russia has vastly under-utilized forest resources and has the potential to increase timber harvests to supply its domestic industry. Forest products exports from Russia have increased rapidly in the past five years, led by softwood lumber and paper products.Īn estimated 40 percent of exports were destined for China, while the remainder was predominantly shipped to European markets. Russia is the largest lumber exporter globally and ranks as the seventh biggest exporter of forest products worldwide. Russia’s exported forest products were valued at over US$12 billion in 2021, and imports of paper products (mainly) were valued at about US$2 billion. These world regions are considering expanded sanctions for Russia and countries that directly or indirectly support Russia’s attack on Ukraine.
This development would mainly affect China, which relies on the importation of forest products, including logs, wood chips, lumber, pulp, and paper from North America, Europe, Oceania, and Latin America for domestic use. As a result, trade with Russia will likely decline, impacting long-established international trade flows of forest products.Ĭountries like China and India, who have reluctantly supported Russia in the conflict, may also be affected by limited trade sanctions. Russia– Increased sanctions against trading with Russia and difficulty with financial transactions are anticipated to interrupt and re-direct shipments of forest products throughout the world.
Transportation suffers from the same problems previously described.With the additional risk that Russia might place restrictions on foreign payments in Euro/USD. Importers using the banks previously described will have the same problems to do their payments.The alternative route via the Baltic Sea is suffering from a shortage of shipping vessels.ĮU exports of machinery and furniture to Russia are expected to be much more affected as such. Road transportation is hugely disturbed from Russia to Europe.Many exporters are using these banks and have to find other channels to receive foreign currencies. The banks that are now under sanctions and will be excluded from SWIFT in the next days (Sberbank, VTB, Otkritie, Sovkombank, Promsvyazbank, Novikombank) represent around half of the Russian banking system.The main difficulties of wood exporters are linked to payments and transportation. No change in this situation is expected until an end of the war.įorestry/wood exports from Russia were not under sanctions at the time of this writing. Ukraine– Trade with Ukraine has come to a near standstill following the imposition of martial law in Ukraine and draft of men. Also, flooding in the key lumber hub of British Columbia last year has kept distribution snarled and supply chains constrained. housing shortage and a continuing focus on home improvement are keeping demand high. Starting this week, price swings will have more room to rise.ĭe-escalation in the Russia-Ukraine war may not offer much price relief either as several factors have been applying upward pressure. Since February 1, they’ve soared 55 percent. Russia is the largest wood exporter in the world, and its exports reached US$12 billion last year.Įven before the war began, lumber prices were volatile. and EU sanctions in response to the invasion are hitting the Russian economy, but such sanctions could pressure lumber prices to go up more. Since Vladimir Putin ordered troops to enter Ukraine, prices have increased by 14 percent up to $1,452, putting them just 15 percent below their all-time peak of $1,711 last May. North America– North American lumber prices have continued to rise since Russia has invaded Ukraine.
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