Wood-based panels consumption in Russia is at its peak, construction industry is in a state of uncertainty and furniture production has shown an increase of 30%.

Russia: wood-based panels market in 2018-2019

The consumption of wood-based panels in Russia in 2018 set another record in modern history and amounted to 12.9 million m3 (+12% YoY). The consumption growth was mainly driven by an increase in the share of particleboard and OSB.

The rise in the consumption of wood-based panels in the domestic market can be partially explained by the positive trends in the furniture industry. In 2018, the furniture production in Russia in monetary terms grew by 6% and amounted to 189 billion rubles, or by 2.7% if adjusted for inflation. Such figures are provided by the Federal State Statistics Service, but they do not cover the “grey” furniture production market. Thus, the estimates of the Association of Furniture and Woodworking Enterprises of Russia for the growth of the furniture market in 2018 are even more optimistic: +30% YoY amounting to 477.5 billion rubles. The growth was affected by an increase in the number of mortgage loans granted and a low interest rate, low consumer prices due to slight inflation expecting the VAT rate increase, growing customer demand for furnished housing, and the prohibition on public procurement of furniture produced outside the Customs Union of the EAEU. However, the situation observed in Q1 2019 is no longer so rosy, and furniture producers have already switched to the strategy of retaining positions achieved in 2018.

The state of the construction industry is much more disturbing. The pace of housing construction in Russia has been declining for the third year in a row by an average of 3.5 million m2 per year. By the end of 2018, the new housing supply totaled 75.3 million m2 (-4.1% YoY). The Russian economy continues to grow. The construction industry is influenced by the VAT rate increase as well as by the transition to project financing using escrow accounts. The housing per capita figure is growing, but its level is still lower than in developed countries. The low housing per capita index in Russia provides an opportunity for further growth in the construction industry. In Q1 2019, the volume of housing commissioning decreased: -5.6% totaling 14.8 million m2. The decrease was noticed in the North-West (-37.4%), Siberian (18.6%) and Ural (13.8%) Federal Districts, the others are showing a steady growth. The maximum increase in housing construction was recorded in the Far East (+27%) and Central (by 8.4%) Federal Districts.

WhatWood Agency has prepared annual updated plywood, MDF/HDF, OSB, and particleboard markets research reports for 2018-2019 containing information on the production output of all Russian enterprises, export and import statistics, analysis of supply and demand balance and other significant factors.

Russia: plywood market in 2018-2019

In 2018, the plywood industry was again in the focus of the Russian forest sector attention. “Rumors “about the introduction of export quotas by the Russian Government for the birch veneering wood, which is essential for the country’s domestic market,” have been going round for the past two years. Finally, in July 2018 Russian, Prime Minister Dmitry Medvedev signed a decree according to which 908 exporters received the quota of 567 thousand m3 for the period from January to June 2019.

Birch plywood is a niche and narrow product on a global scale. Global consumption of birch plywood is consumed annually 5-6 million m3 or about 3-5% of the total world production. Russia is the world leader in the production of birch plywood, which is primarily explained by the raw materials dominance of Russia, where the regions of extensive birch growing are located. Russia occupies 64% of the global market for birch plywood.

From the 3rd quarter In 2018, there was a negative trend in the plywood sales markets, which began as a result of the excess of demand over supply and the strength of the global trend of lower prices for forest products. The study outlines the factors that influenced the decline in prices, and the search for “growth points” in difficult economic conditions.

“Plywood market in Russia 2018-2019” includes:

• analysis of the current situation in Russian and global plywood markets;
• statistics on production volumes, sales for exports and the domestic market in terms of countries and working plywood mills (67 Russian producers);
• prices for plywood;list of implemented and announced investment projects for the construction of greenfield plants, and the expansion of existing facilities;
• analysis of risks in the introduction export quotas of birch veneer logs;
• forecast of development of demand and competition in the Russian market.

Russia: MDF/HDF market in 2018-2019

In 2018 the dynamics of the global economy weakened against the background of the marked slowdown in growth in both developed and emerging market economies and in developing countries. The loss of dynamism was particularly noticeable in the manufacturing industry amid signs of a slowdown in global investment and trade. The furniture sector, flooring continues to be under pressure, especially in Russia due to the weakening consumer demand.

In April 2019, Pavlovsky DOK LLC was launched. Altailes began plant construction at the end of 2016. The volume of investments amounted  6 billion RUB. The plant will produce MDF/HDF with a thickness of 2.5 to 40 mm in a volume up to 250 thousand m3/y. The production of laminated MDF / HDF is considered as the second stage. Probably the company will cover the panels demand in the regions of Siberia, some of the products will be sold to China, the CIS.

“MDF / HDF market in Russia 2018-2019” includes:

• analysis of the current situation in Russia and global markets MDF / HDF, flooring;
• production statistics,sales to exports and the domestic market by countries and mills (16 Russian producers);
• description of specifications of Russian manufacturers, exports and imports products (by thickness and formats);
• list of implemented and announced investment projects for the construction of greenfield plants, and the expansion of existing facilities;
• structure of export sales of the largest manufacturers (by products: thick MDF / HDF, flooring, etc.);
• five-year forecast for supply & demand and prices, including mill operating rates;
• analysis of the prospects for the development of the market and a description of the main trends in the three possible scenarios and probabilities until 2024;
• five-year forecast of demand for thin and thick MDF / HDF by consumption segments (furniture facade, doors, flooring, etc.) until 2024.

Russia: OSB market in 2018-2019

In fact, the Russian OSB market in 2018-early 2019 even turned out to be more eventful than expected, and became significant for the development of the Russian panel industry: Kronospan OSB (Bashkortostan, Ufa) completed the project of OSB plant, and the company Talion Arbor (STOD) reached the design production volume and filled to capacity of 100%. Two large-scale projects with a capacity of more than 1.1 million m3 of OSB per year were announced.

“OSB market in Russia 2018-2019” includes:

• analysis of the current situation in the Russian and global markets;installed capacities and actual production and export volumes in 2018;
• statistics on volumes of production, sales for export and domestic market by countries and mills (6 Russian producers);
• list of frozen, under-construction and announced investment projects with current stage;
• five-year forecast of demand and price;main trends, scenarios until 2024.

Russia: particleboard market in 2018-2019

Particleboard production in 2018 reached the record volume +15% compared to last year. Such increase was ensured by Kronospan Bashkortostan, Swiss Krono, Tomlesdrev. Capacity utilization in 2018 was 84% (in 2017, 76%). In the case of the implementation of all announced investment projects domestic capacity may increase by 1.3 million m3.

“Particleboard market in Russia 2018-2019” includes:

• analysis of the current situation on the Russian and global markets of particleboard;
• statistics on production volumes, sales for export and domestic market in terms of countries and enterprises (37 Russian producers);
• list of frozen, implemented and announced investment projects for the construction of greenfield plants with a stage indication;
• five-year forecast for the development of the market until 2024;
• main trends, scenarios of development until 2024.

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