The 2021 Import Trade statistics for Australia were finally released and one of the stats that stands out the most is although only 3.07% of the softwood lumber imports into Australia were shipped directly from Russia, 21.56% of the softwood lumber imports were from the Baltic states of Estonia, Latvia and Lithuania. A very large percent of this volume is Russian and Belarusian origin rough KD wood fiber that is brought to the Baltic States to be surfaced, graded and then packaged for shipment to Australia.
For the past 5 weeks, there has been a dramatic increase in inquiries for Australian construction lumber sizes, lengths and grades from other regions of the world that traditionally were much smaller players in this market.
I was asked by one of my international clients this morning how many sawmills in North America are set up to produce Australian lumber sizes and lengths? The answer is very simple. Less than a handful would even be willing to look at it today. Especially with how strong the US market is and how sawmills in North America are set up from the forest to the sawmill packaging lines for US lengths. (but call me if you are interested in learning more about this market)
This is, however, another example of how the global wood products trade flows are changing dramatically and being reshuffled with the ban on Russian and Belarusian wood fiber entering Europe. Where is the construction lumber for Australia going to come from moving forward? This is a question that only Europe can answer. But many of those European sawmills are also cutting for the strong US market. Are they willing to turn their focus to another country when their own domestic needs are increasing due to lack of supply as well?
@David_Stallcop Your global perspective and insights are fascinating. You raise a good question that highlights the complexities of the wood supply chain and the knock-on effects of disruption.
Given your analysis here, are you saying that Estonia, Latvia, and Lithuania import more Australian Construction Lumber from Russia than Australia?
Australia imports from Estonia, Latvia and Lithuania and those 3 countries import a lot of their the raw material to produce that lumber from Russia and Belarus.
Is there any reason why surfacing plays a bigger role in the intercontinental trade of lumber than in the US? What do we call these types of companies doing all this surfacing, grading, and packaging? Last question do these types of companies take ownership of the product and use their own brands?
Andrew, by surfacing the lumber it calibrates it to a tight tolerance for general construction lumber. For packaging and crating materials you can use rough lumber. The majority of the mills in the Baltics who are surfacing and grading the wood fiber from Belarus and Russia are “Planing mills”. But also some sawmills who don’t have the sawing and drying capacity but do have excess planing capacity also buy rough KD lumber from Russia and Belarus. It also allows some of these sawmills to run their sawmill on one shift but their planing mill on 2 shifts. The planing mills do indeed take ownership of the product and use their own brands. So, it is Baltic spruce and Baltic pine and not Russian or Belarusian pine when it is sold and marketed. Although in many cases the actual fiber is not Baltic.
do these types of companies take ownership of the product and use their own brands?