Announcing publication of Russian Forest Industry Review 2021-2022 annual analytical review

The year 2021 was the most successful in contemporary history for the Russian timber industry in terms of financial performance. The revenue of timber enterprises soared by 32%, up to 2.9 trillion rubles; their net profit, by 3 times, up to 460 billion rubles, and the timber industry’s contribution in the national GDP reached 2%.

The key factor that drove such incredible results in 2021 was undoubtedly the unprecedented growth of prices for all timber products in the Russian and global markets. The Russian timber industry thus fully rebounded after the slump during the coronavirus restrictions and lockdowns period in 2020.

In 2021, the export revenue from selling Russian timber industry products grew from $11.7 billion to $16.7 billion. The target set by the Russian Government for 2024 within International Cooperation and Export project was thus achieved ahead of time.
Russia: structure of forest product exports by country in 2021

All major segments of timber products demonstrated positive trends year-on-year in 2021. The timber harvesting volume in Russia grew by 4%; the sawn timber output volume, also by 4%; plywood, by 11%; MDF / HDF (including fiberboard produced by dry process), by 15%; particleboard, by 17%; OSB, by 15%; wood pulp, by 1% (measured by pulp cooking); paper and cardboard, by 15%; wood pellets, by 5%.
The Russian timber sector obviously closed the year 2021 and began the year 2022 with a perfectly positive attitude.

In the end of February 2022, the Russian timber industry, along with the Russian economy in general, found itself in the new real whose significance and consequences can hardly be overestimated. The Russian timber industry faced restrictive measures of financial, transportation & logistics and sanctions pressure in their entirety; they were declared both at the corporate and at the national level.
The most significant negative consequences will probably follow the fifth package of sanctions adopted by the European Union on April 8, 2022. The European Union banned the import of Russian timber industry products. The ban on Russian imports to the EU covers: the whole HS Code 44 group (wood and articles of wood; wood charcoal); HS Code 4705 (wood pulp obtained by a combination of mechanical and chemical pulping processes); HS Code 4804 (uncoated kraft paper and paperboard); and HS Code 9403 (other furniture and parts thereof).

Besides the ban on Russian imports, the European Union prohibited exporting certain timber products to Russia. This list includes certain types of sawn timber and wood-based panels, plywood, paper and cardboard. The export ban also applies to machinery and machine tools for the timber industry, knives, sawing and cutting tools, presses for panel production, etc.

According to WhatWood calculations, in 2021, the export of currently sanctioned timber industry products from Russia to the European Union was $3.8 billion in monetary terms and 15.3 million tons in physical terms. Sawn timber ($1.4 billion) and plywood ($0.8 billion) account for most of this export. In reality, these numbers are even higher, since the European Union includes 27 countries, while there are over 50 countries in Europe, supplies to which will be de facto impossible, too. The United Kingdom, the USA, Japan, Australia and others are also introducing restrictions against Russian timber industry products on their own.

The biggest European Union buyers of Russian timber products subject to restrictions are Finland ($660 million), Germany ($613 million), Estonia ($394 million) and the Netherlands ($241 million).

The Russian timber industry will probably survive for a while by using up the reserves accumulated from the incredible earnings in 2021. These resources will probably last until the end of Q3 – Q4 2022, after which stagnation in the industry will become inevitable, unless the foreign policy situation normalizes. Several enterprises have already declared they would have to cancel investment projects implementation or suspend them. The timber industry recession is estimated at 10 – 30% (based on 2022 performance) by the most optimistic expectations.
The Russian timber industry probably hasn’t faced such large-scale problems with sales and such restrictive measures since 2009, when the industry’s output dropped by approximately 30%.

It is now virtually impossible to forecast or contemplate any kind of development scenarios for the short term or the long term, since information is continuously changing under the circumstances of extreme uncertainty.

Nevertheless, WhatWood Analytics Agency made a decision to publish its main annual analytical review, Russian Forest Industry Review 2021-2022, which summarizes the results of the successful year 2021 and early 2022 based on informational, analytical and statistical data currently available. In late April 2022, the news broke that the Federal Customs Service temporarily stopped publishing export and import statistics for an undefined time.

Russian Forest Industry Review 2021-2022 annual analytical review includes: a detailed analysis of the condition of timber sector segments and the key trends; changes in the industry’s key performance indicators (the trends of output, consumption, import and export volumes, as well as prices by countries, regions and enterprises); and also comments by market players based on performance in the past year and in the beginning of the current year.

• Analysis of the condition of the Russian economy and its impact on the Russian forest management and timber industry; positioning in the global market;
• Analysis of the key trends in the Russian forestry legislation;
• Analysis of the annual trend of the key timber products market indicators (output, import, export, prices);
• Analysis of changing capacities of enterprises producing timber industry products;
• Adopted and implemented priority investment projects in the forest sector;
• Key trends of the timber industry development;
• Segmentation of Russian production in natural terms by the following types of products: roundwood, sawn timber, wood-based panels (particleboard, OSB, fiberboard, MDF, plywood), wood pulp, paper, cardboard, paper packaging, biofuel / Trends by regions and periods (month, year);
• Review of the biggest producers of timber products, the changing trends (output, export, import);
• Key events in the Russian forest industry.
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