Most of the focus in the past weeks has been on European reliance on Russian fossil fuels and the way this affects the economies on the continent however, there are other markets where Russia is an important player, chief among them – the wood industry. Sources: The Mayor EU, Timberbiz, Reuters
At the end of last week, the EU authorities imposed a ban on wood products from Russia and Belarus. Concurrently, Russian authorities made a similar move by prohibiting exports of these products to the European Union until the end of the year in what is becoming an increasingly tough economic and trade war.
The wood product trade ban, however, will likely negatively impact several critical industrial supply chains, for example, food and medicine, which are logistically based on wooden pallets. Many wood-based construction materials, such as birch plywood and sawn timber, will be very hard hit, which in turn could hamper the EU’s Green Deal push to decarbonise the built environment and construction sector with organic materials.
Sweden, as a major producer of timber and wood products, is one country in the EU that is not concerned about the severing of trade links. Its annual production of sawn timber rounds up to 18-19 million cubic metres meaning that at least locally there won’t be any shortages.
However, the impact on the European market may be greater. Europe, as a whole, imports 5-10 million cubic metres annually from Russia and Belarus.
Imports, which are now expected to decrease significantly or cease entirely. According to official statistics, slightly less than 10% of the sawn softwood consumed in Europe in 2021
originated from Russia, Belarus and Ukraine. In the hardwood sector, oak goods originating from Ukraine made up a significant quantity. Shortages are therefore expected.
“We see that competition for the wood products available on the European market may increase. At the same time, we follow how the conditions for the transport sector develop with rising energy prices and the logistics challenge in the rest of the world. There is a risk that a previously pressured situation will get worse,” explained Christian Nielsen, market analyst for the Swedish wood industry.
The world’s three biggest container lines on have temporarily suspended cargo shipments to and from Russia in response to Western sanctions on Moscow following its invasion of Ukraine, in a further blow to trade with the country.
Swiss-headquartered MSC, the world’s biggest container shipping company by capacity, said in a customer advisory that it had introduced “a temporary stoppage on all cargo bookings to/from Russia, covering all access areas including Baltics, Black Sea and Far East Russia.
Denmark’s Maersk, which is the second biggest carrier after MSC, said it would temporarily halt all container shipping to and from Russia, also adding that the suspension covering all Russian ports, would not include foodstuffs, medical and humanitarian supplies.
France’s CMA CGM, the world’s third-biggest container line announced it had suspended all bookings to and from Russia until further notice, citing safety concerns. The moves follow similar decisions already taken by Singapore-headquartered Ocean Network Express and Germany’s Hapag Lloyd.
Meanwhile the exodus of timber and forestry companies from Russia continues with the latest Finnish company Koskisen who has decided to discontinue its operations there. The company will run down its Russian’s sawing operations and stop importing sawn goods and logs from Russia. Koskisen is a manufacturer and supplier of plywood and plywood products.
US company International Paper has also announced its intention to explore the possible sale of its 50% interest in Russian Ilim Group.
