Lumber trade 'permanently altered' by sanctions on Russia -

The global lumber trade will be permanently altered by the sanctions placed on Russia following its invasion of Ukraine, according to Wood Resources International (WRI).

The organisation said that the forest-product trade was interrupted “almost instantly” when Russia invaded Ukraine, and that sanctions and restrictions imposed by Europe, north America and some key Asian markets disrupted shipments quickly.

The WRI stated that Ukraine, Russia and Belarus combined, exported 34 million cubic metres of lumber in 2021, with over 25% of that volume going to countries that currently have sanctions against Russia and Belarus.

It is now estimated that due to these sanctions an estimated 10 million cubic metres, or just above 30% of the total volume exported last year by the three countries, will not make it to the market in Europe and Asia, excluding China.

Europe will be hit the hardest by these supply chain interruptions as last year, it imported 8.5 million cubic metres of softwood lumber from the countries. This volume accounted for almost 10% of total product consumption on the continent.

The WRI also reports that alongside the introduction of trade sanctions, two major wood certification organisations, the Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC), have labelled all timber coming from Russia and Belarus as ‘conflict timber’.

This labelling means the timber cannot be used in the manufacture of certified products, impacting any country that buys wood from either Russia or Belarus to make such products including plywood, pulp and paper for worldwide sale.

While China has not set up any trade barriers between it and Russia, it may still experience interruptions to shipments in a number of instances.

It is possible that foreign investors in the Russian industry may pull their presence or their funding, making it increasingly challenging for the country to produce and export products.

The weak Russian ruble, which has fallen by approximately 20% since the war began, may also cause problems for production lines in the wood industry, in the form of costly equipment for logging companies and manufacturers.

It’s also likely that the removal of Russian banks from the SWIFT international payment transaction system will complicate payments for exported Russian products and also for timber harvesters, sawmills, plywood mills and pulp mills as they attempt to import machinery.

WRI estimates that the changes in the global trade of forest products as a result of the war will continue.

In a statement it said: “Even when peace is ultimately reached, it is improbable that trade will revert to pre-war patterns.”