WhatWood Agency has completed an update to its annual survey Russian Particleboard Market in 2019-2020

The players of the domestic PB market in 2019 faced the somewhat sluggish demand for products in the domestic market. Money income of the population did not help to support the demand for furniture. For four years, starting since 2014, there was a decrease in the real disposable money income of the population in Russia. In 2018 the indicator growth rate returned to the zone of positive values, but real disposable income increased by only 0.1%. In 2019,the growth rate of real money incomes of the population accelerated and amounted to + 0.8% compared to the previous year. Real disposable income of the population in 1Q 2020 went into negative territory again: -0.2% y/y. The peak decline in income will occur in the 2Q 2020. According to VEB forecasts for the 2Q 2020 they may collapse by 17.5% at once, for the whole of 2020 – by 6.5%, which will be a record since 2014.

On the other hand, the favorable situation that developed throughout the year in the timber market somewhat compensated for the disappointment of producers from the sales decline. The surplus of  pulpwood supply allowed PB producers to receive only high-quality raw materials at very attractive prices. Prices for coniferous and deciduous pulpwood fell in the 3Q 2019 and only by the end of the year the decline stopped.

The challenge brought by the new year 2020 worsened the consumption situation, at least in the first half of the year. In April 2020 the increased intensity of the COVID-19 spread had a significant impact on the reduction in domestic consumption, including the decline in furniture sales.

According to the Association of furniture and woodworking enterprises 2/3 of Russian furniture enterprises stopped their production for the period April-May 2020. Furniture companies lost part of their sales in April and May and went away with negative revenues compared to last year. After the reduction of restrictions, PB manufacturers are demonstrating attracting consumer attention, experiencing an influx of orders from furniture factories and actively increasing shipments.

The movement towards the revival of consumption in the domestic market is already evident. It is difficult to say now for sure whether this is a deferred demand or the process of equalizing demand is already in operation. In the current situation consumer activity and solvency come to the fore as the main drivers for the recovery of the wood-based panel segment.

Read detailed information in the annual review Russian Particleboard Market in 2019-2020.