April 28, 2021
Russian Proposed Export Ban of Logs
In October last year, Russia’s president Mr Putin announced that Russia intends to ban the export of all softwood and hardwood logs. The proposed ban is to be implemented in 2022 and will have serious consequences for neighbouring China and Finland who are the largest buyers of Russian logs.
The world is facing an enormous shortage of logs and lumber since the 3rd quarter of 2020. This situation is expected to last through 2021 into 2022, and the Russian ban will add more pressure to the supply situation.
China has been buying huge volumes of soft- and hardwood logs from Russia and will have to look for new resources worldwide to make up for the lack of Russian material. South America and New Zealand are large log suppliers to China, and South America might increase export volumes. At the same time, it is unlikely that New Zealand will be able to increase log exports drastically. Hence, China will have to purchase more sawn timber across the globe, which leads to less available sawn timber for other markets.
Finland’s log imports from Russia, mainly softwoods, are far less than China. But there will be an impact on the Finnish sawmilling industry as well. It is not unlikely that many mills will close due to a lack of raw material. Some Finnish mill owners did start sawmills across the border in Russia but complained about Russia’s difficult business climate.
All in all, there will be more pressure on the supply chains of logs and sawn timber worldwide. Even if the Covid-related construction boom weakens, sawn timber prices will only slightly weaken and not return to 2019 levels.
By the way, Russia’s proposed log ban makes sense. It forces Russia to build more sawmills and processing plants, thus creating employment to produce higher-value export products. More countries should consider doing the same, either banning the export of logs or imposing taxes on exported logs. Export bans and increased tracing of harvested logs come with an additional positive effect, reducing illegal log trade domestically and for export.