Export of Russian timber in 2023

Exports of Russian timber, almost completely reoriented to China, in 2023 barely exceeded half of their pre-crisis volumes. The loss of the EU and North American markets is not fully compensated by the development of new directions, among which the most promising are the countries of Central Asia, Azerbaijan and Iran. Infrastructure restrictions on the BAM and Trans-Siberian Railways and the low priority of timber cargo there, as well as the crisis in the local real estate market, are hampering the increase in exports to China.

Exports of Russian timber in 2023 fell by almost half compared to 2021 – by 45%, from 45 million to 25 million tons, as follows from the presentation of Transles managing director Ruslan Pryanikov at TransRussia 2024 last week.

There have been significant changes in the structure of exports: for example, half of exports in 2023 were sawn timber (in 2021 – only 38%). Mr. Pryanikov explains the increase in the share of lumber by the fact that due to the closure of European markets, in particular Finland, and the complication of supplies to North America, the export of pellets, board products and veneer has decreased. “Lumber has lost all exports to Europe,” he says. “Exports to China have decreased due to the fact that the Chinese real estate market is still experiencing a crisis: over the past couple of years, the Chinese real estate market has shrunk by 60%. This is due to the crisis and pre-bankruptcy state of a number of developers in China. The real estate market directly correlates with lumber consumption. In the USA – no changes, Russia is not particularly represented there in terms of sawmill. In Japan – a decrease, Egypt, Saudi Arabia – too. We have virtually no presence in India either.” The only markets that remain stable, he adds, are Central Asia, Azerbaijan, and Iran.

As for round timber, which Russia traditionally supplied to China and Finland (9% of the export structure at the end of 2023), in 2022, says Ruslan Pryanikov, “we came to the conclusion that timber was banned in Finland, and today Every day, timber is not exported there at all, and in China there are internal restrictions that have arisen recently: these are duties and a ban on the export of coniferous species.” At the same time, he notes, when logging conifers, there are still other, soft species that are not processed in Russia today, and you still have to transport the timber in the Chinese direction, which today presents great difficulties. He calls for expanding the transport capacity of BAM and the Trans-Siberian Railway as soon as possible – “not by 30 million tons, but by 300,” noting that the whole country has hit a bottleneck at the Eastern range. At the same time, Mr. Pryanikov notes, a separate problem of the forestry industry is that round timber is in the seventh line in the temporary rules for the priority of cargo transportation at the Eastern range (lumber is in the fifth), and today the industry within the Eastern range does not receive or receives very meager approval of plans for round timber.

Supplies of pellets (7% of the 2023 export structure) to Europe have completely stopped. “Today the only market left is Japan and Korea, but it cannot cover the entire need for exports,” says Ruslan Pryanikov, noting that an important issue for pellet consumption, which is being decided today at the government level, is the transfer of boiler houses to the use of renewable energy resources.

According to Mr. Pryanikov, there are several options for expanding exports. One of them is an increase in supplies along the North-South route through Azerbaijan and Iran. However, he notes that there are limiting factors associated with cargo processing at the terminal in Astara on the border with Iran: the average time for unloading a wagon is 10 days, sometimes downtime reaches 30 days. There is a good potential for increasing the efficiency of transportation in the event of the return of loaded platforms, however, at the request of customs authorities, loading containers onto timber platforms equipped with end shields is not possible. The latter do not allow the container doors to be opened, and at the border crossing stations there is no equipment to unload the container from the platform into the customs inspection area. A way out of this situation could be the registration by the customs authorities of the Russian Federation of the necessary documents with inspection at the final destination stations in Russia. In addition, there is an urgent issue of coordinating transportation to China for unprocessed aspen and birch, the processing capabilities of which are insufficient in Russia.

According to the head of Infoline-Analytics, Mikhail Burmistrov, it is necessary not to try to restore exports to the unattainable pre-crisis level, but to actively work to increase consumption in Russia. In the area of ​​consumption of fuel pellets and technological chips, the prospects lie in the conversion of boiler houses and small-scale generation to these types of fuel, where appropriate. The production of house kits is also promising. Mr. Burmistrov notes the attractiveness of deep processing – large investors have entered this sector, for example TechnoNIKOL, IKEA enterprises have been acquired by Russian investors, plus domestic demand for furniture is actively growing, as is the volume of housing commissioning. Long-distance export of forest products is not feasible globally, he believes, but there are prospects for its containerization and shipping of containers, for example, through the ports of the North-West.

Container transportation of timber cargo is indeed growing, but in the rail segment it is growing very slowly.

In January-February, according to Russian Railways, 88.5 thousand TEU were transported (an increase of 0.8% compared to the same period a year earlier). At the end of the year, the volume of transportation of timber cargo in containers amounted to 597.2 thousand TEU (an increase of 2% by 2022). Transportation of timber cargo in 2023 fell noticeably – by 14.2%, to 26.9 million tons; according to the results of January-February 2024, there was some growth – by 4.9%, to 4.5 million tons, but that’s all another third less than in the same months of 2021. Transshipment of timber cargo in Russian seaports, according to Mortsentr-TEK, in January-February decreased by 35.6%, to 439.6 thousand tons, continuing the trend of 2023, when it fell by 28.2%, to 2.3 million tons.

As explained in Roslesinforg, now export flows are almost completely directed towards Asia. For example, in the pre-sanction period, the share of Asian countries in the structure of lumber exports was about 70–80%, and in 2023 it is already 98%. “China has been and will remain Russia’s main trading partner; for the last few years we have not seen a decline – everything remains at approximately the same level,” notes Roslesinforg. “Two more main partners are Uzbekistan and Kazakhstan.” It is unlikely that the situation regarding the key three will change in 2024, the agency believes. The Indian market is being tested, but logistics are still expensive; paper, plywood and lumber of non-standard sizes are in demand in the country.

Natalia Skorlygina, Olga Mordyushenko