About 10% of the lumber consumed in Europe comes from Russia. With the ban, Europe is more likely to move most of its production to domestic markets, slashing exports to offshore markets such as the U.S. and Canada.
@David_Stallcop @David_Bagdy @Matt_Layman @Michael_Haas @Andrey_Tikhomirov
What do you think? Will/is Europe depending more on domestic production? If so, then do they have enough capacity for this?
What is the current state of the The Great Lumber Shuffle and what are the knock on effects?
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I do not have enough experience to be an expert in the forestry industry and I can only rely on what I see and hear and on my feelings.
I agree with @Matt_Layman that this is the Great Lumber Shuffle. And he is absolutely right that China will become the largest buyer of Russian timber (there are several important reasons: China and Russia are on the same continent, have a common border and a railway network), he also predicted that Russia will have the lowest price for lumber in the second half of 2022, well, the second half of 2022 has just begun, let’s see how it all ends, but so far the price is about the same in Europe, in the USA or in Russia.
After the ban on the import of Russian lumber to Europe, Europe will have to rely on its own wood industry.
According to a friend of mine who trades lumber in Europe, due to high inflation and rising prices for essential goods, consumers don’t want to spend their money on construction and they don’t want to buying lumber for renovation. Demand for lumber has dropped dramatically. Vacation season ahead and Сovid restrictions were cancelled, people would rather spend their money on some kind of travel rather than construction or renovation, and merchants don’t expect that demand for lumber will raise even when the vacation season is over. Unless gas and electricity prices come down, people will be forced to save money to pay for heating their homes during the winter.
Therefore, traders do not expect a recovery in demand and rely on the fact that the capacities of European sawmills will be enough for domestic demand, but who knows how it will actually be…
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@Andrey_Tikhomirov this is a great analysis – thank you for posting! Very insightful. @David_Bagdy what are you thoughts on this? Do you agree with @Andrey_Tikhomirov?
@David_Stallcop what are you seeing in buying/selling/planning behavior in Europe?
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Hello @Nadia
Greetings from the Carrefour Du Bois show in France this week.
The analysis above is dead on correct.
This summer there will be little volume business done anywhere in the northern hemisphere. Everyone will be traveling or vacationing somewhere.
The last shipments out of Russia and Belarus must clear customs in the US by June 30th and in Europe July 10th. For the past 3 months most of the importers and remanufacturers in the Baltics and the rest of Europe imported close to twice the normal volumes ahead of the official ban dates that I listed above. So, by the end of the summer those companies who have been importing from Russia and Belarus will need to find new raw material supplies which will mainly come out of Finland and Sweden.
Prices are off in Europe roughly the same percentages as the US in the past month or so.
Sawmills in Europe are expecting the US market to strengthen again after summer and prices to move back up. So most of the producers shipping to the US have decided to keep volumes status quo and ride out this dip in the market.
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Thank you @David_Stallcop! Great follow-on analysis with some insightful forecasting post the summer. Lots of info from you all and fertile ground to run some polls across the industry here. Any suggestions requests on what’s interesting to gauge please post here for @Pakira !
@David_Stallcop @David_Bagdy @Andrey_Tikhomirov @Matt_Layman and anyone else!
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@Thomas_Mende Given your international reach and expertise, it would be really interesting to hear your thoughts here. Do you agree with @Rithika_Krishna @Andrey_Tikhomirov and @David_Stallcop?
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The global supply chain interruptions and reordering likely will continue to induce disruptive oscillations and volatility into the supply chains for a long time. Once significant perturbations are imparted on complex systems, it is difficult for the the system to find a new equilibrium quickly.
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Agree with all that has been said. The real impact will be seen starting September, but then its a permanent change because the switch once flipped won’t be reversed for a long time.
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Having just returned from Russia I can share my opinion as to what I see happening there. It appears the EU will strongly enforce their ban on the importation of Russian wood products. This is a concern for EU mills, particularly Baltic mills, that rely heavily on Russian raw material.
Russian wood continues to ship to the States. Much less volume but containers are loaded and shipping on a regular basis. Most of this volume is 4/4 boards & strips.
The prices from China currently are too cheap for mills in Northwest Russia. These mills continue to focus on the USA and are looking for better days ahead.
We still have a healthy housing market and DIY market here in the States. We are bouncing around 1.7 housing starts. Thats a strong number for domestic mills to supply. Where will the wood come from?
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