In 2017, wood-based panels consumption in Russia increased after two years of decline: OSB – driver of growth

Balance of the supply and demand of wood-based panels directly depends on the state of the economy and macroeconomic factors affecting the two main consumption segments: construction and furniture industry.

Construction

In 2017, Russia built more than 1.1 million apartments. The figures for the total area of housing commissioning from Rosstat (78.6 million m2) and the Ministry of Construction (79.2 million m2) vary, but both government departments showed a decrease in pace in 2017: by 2.1% and 0.7% respectively.

Ministry of Construction already forecasts positive dynamics in 2018: 80 million m2. Meanwhile the market is growing steadily: for the first quarter of 2018, +19.6% (YoY) and 15.7 million m2 of housing built. But the pace in St. Petersburg is already declining by 34%, the Krasnodar region — by 25%, Moscow — by 11% and the Republic of Bashkortostan — by 10% (Rosstat data).

If the Russian authorities introduce an amendment to the law on equity construction on a total ban for the sale of unfinished housing by 2020, the market will be cut down. From July 1, 2019, real estate developers will receive money for the sold housing only after the apartment is given to the buyer.

For the timber industry, a positive moment, theoretically, could be a program to subsidize rates on loans for the purchase of prefabricated wooden houses (Medvedev signed the prescript in March 2018). This implies a temporary reduction of the interest rate from 15 to 10%. For these purposes, the budget provides for 197 million rubles — approximately 2,500 houses. Whether this measure of the support of timber industrial complexes will prove effective is not yet clear.

Furniture

In 2017, furniture production in Russia reduced by 5% to 148.5 billion rubles, such figures were quoted by Rosstat. A sharp reduction is noted in the Moscow region, which has the largest number of furniture producers. Rosstat data does not include “gray” market figures. Partly, the decline in furniture production is due to the fact that some small, medium-sized enterprises, individual entrepreneurs “withdraw into the shadows” and correspondingly do not provide reports to Rosstat.

The total volume of the furniture market in Russia is estimated at 420–450 billion rubles. Low purchasing power, reduction of real disposable incomes of the population and dependence of producers on imported furniture limit the growth of the market.

Support for the furniture industry may be the government’s decision to ban public procurement of foreign furniture (Medvedev signed the prescript in December 2017). The ban will last two years. The measure is designed to increase the load of domestic furniture production from the current 40–50% and acquire additional orders for 30–40 billion rubles in a year.

Wood-based panels production

In such circumstances, the Russian market of wood-based panels in 2017 showed growth. The consumption of wood-based panels (plywood, MDF/HDF, dry and wet fiberboard, OSB, particleboard, etc.) in Russia in 2017 increased by 5.8% YoY to 11.5 million m3 after two consecutive years of reduction. Mainly, the growth in particleboard consumption was due to the increase in the share of OSB (+25.6% YoY), particleboard (+5.8 YoY), MDF/HDF (+ 4.7% YoY). Consumption of plywood in the domestic market has been declining for three consecutive years.

The WhatWood timber industry analytics agency prepared an annual update of research on plywood, MDF/HDF, OSB and particleboard markets for the years 2017–2018.

Particleboard market in Russia in 2017-2018
Plywood market in Russia in 2017-2018
MDF / HDF market in Russia 2017-2018
OSB market in Russia 2017-2018