Log trade implications of Russia-Ukraine conflict

Wednesday 6 Apr 2022

(Margules Groome) Log trade in the Asia-Pacific region is dominated by imports to China – Over 20 years, log imports to China have increased four-fold and now account for 44% of total global log imports (Figure 1). Meanwhile sawn timber imports to China peaked at 22 million m3 in 2019, an increase of 17 times since the early 2000s (Figure 5). The Russia-Ukraine war could impact the forest products trade in several ways:
  • Pivot of Russian exports of logs and timber from Europe to China.
  • Place cost pressures on supply chains from Europe to China as European producers look to more attractive markets closer to home reducing their exposure to China.
  • Rising bunker fuel costs could side-line marginal log exporters (particularly south-east US, Brazil and Uruguay) to the Asia-Pacific.
Before the onset of the global financial crisis (GFC), Russia was China’s primary softwood log supplier. The Russian industry has transitioned towards wood processing(Figure 2) and in 2020 Russia was the second largest exporter of sawn timber in the world (Figure 3). In 2020 Russia announced that export of unprocessed conifer and hardwood logswould be banned starting in 2022[1]. New Zealand and Europe are the two largest suppliers of softwood logs to China (Figure 4) and Russia is the largest supplier of sawn timber (Figure 5). Despite some apparent cracks in the China real estate market, demand for log imports remains intact – at least for now. The Russia-Ukraine war may contribute to a reversal of some trends in the Chinese log supply, potentially bringing Russia back to the log export market, reorient sawn timber exports from Russia and further boost ocean freight costs.



Source: Margules Groome

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