Russian furniture producers faced a growth of component prices

Domestic producers have faced a considerable growth of component prices for furniture production. This problem was discussed by participants of the V All-Russian Conference of Furniture Producers. The event was organized by the Association of Furniture and Woodworking Enterprises of Russia.

According to Boris Frenkel, Director for Public Authorities Relations at Sveza, phenol became 40% more expensive in April – May 2024. Importantly, it accounts for about 70% of the cost of resin used to make plywood. Another reason for growing plywood prices is a shortage of raw material and the rising cost of veneer logs. As noted by Boris Frenkel, their price surged by more than 66% from January 2023 to April 2024.

Moreover, Chinese companies are increasing supplies of cheaper plywood made from Russian raw materials to international markets. As a result, the export of domestic products has reduced by a third since 2021.

“We used to export more than two thirds, while high export prices enabled us to keep domestic prices low, but now we have lost more than a half of export markets that have not been restored yet,” says Timur Irtuganov, Director General, Association of Furniture and Woodworking Enterprises of Russia.

The growing cost of Russian-made furniture is also driven by transportation expenses that rose by 30% over two years. At the same time, the supplies are slowed down by the increased load on the railway infrastructure.

According to Sergey Zmievsky, President at Almaz, international sanctions deprived Russian furniture producers of export-driven development, while the domestic demand does not make up for the growing expenses. Besides, furniture manufacturers spend additional funds to install Chinese equipment at their plants.

According to the Association’s estimates, all these factors accelerate the growth of furniture prices that used to be contained over the past two years. Association members believe that the industry needs new support tools from the government.