Financial transaction

Russia’s invasion of Ukraine will likely reduce exports of forest products

Russia’s invasion of Ukraine is expected to impact global trade in the months to come. Increased sanctions against trade with Russia and difficulties in financial transactions are likely to disrupt and redirect shipments of forest products around the world. As a result, trade with Russia will likely decline, impacting long-established international trade flows of forest products.

Countries like China and India, which have reluctantly supported Russia in the conflict, could also be hit by limited trade sanctions. This development would mainly affect China, which depends on the import of forest products, including logs, wood chips, lumber, pulp and paper from North America, Europe, the United States. ‘Oceania and Latin America for domestic use. These regions of the world are considering extending sanctions to Russia and countries that directly or indirectly support Russia’s attack on Ukraine.

Governments in North America and Europe are also seriously considering excluding Russia from the international SWIFT monetary transaction system. If this happens, Russian companies will find it difficult to trade with the world.

Russia exported forest products valued at more than $12 billion in 2021, and paper product imports (mostly) are valued at around $2 billion, according to Timber Resources Quarterly. Much of this trade is under threat.

Russia is the largest timber exporter in the world and ranks seventh in the world among exporters of forest products. Russia’s forest products exports have grown rapidly over the past five years, led by softwood lumber and paper products (see table).

To note. An estimated 40% of exports were destined for China, while the rest was mainly shipped to European markets.

Russia has vastly underutilized forest resources and has the potential to increase timber harvests to supply its domestic industry. To meet the growing global demand for forest products, the Russian government has recently launched programs to encourage investment in the sector to both expand/upgrade existing manufacturing plants and build new facilities.

However, it is likely that many investment projects in Russia’s forest products manufacturing sector will come to a halt as the growing list of sanctions and restrictions on financial transactions come into effect.

Are you interested in the insights of the Global Wood Products Market? The Wood Resource Quarterly is a 75-page quarterly report established in 1988 and has subscribers in over 30 countries. The publication tracks the prices of sawlogs, pulpwood, lumber and pellets and reports on timber trade and market developments in key regions of the world. For more information on the latest trends in the international forest products market, please visit www.WoodPrices.com.