On February 24 Russia invaded Ukraine. Apart from the fact that the previous security structure in Europe was being turned upside down and that a war of aggression was being waged for the first time since World War II, this invasion had concrete economic effects, including on the forest and timber industries.<\/p>\n
One consequence that became apparent even before the attack was the high energy prices, especially for natural gas, 55% of which Germany gets from Russia. They affect the economy as a whole. The state gas company Gazprom has only delivered minimum quantities for months and, contrary to all economic sense, has not reacted to the high prices with spot deliveries. The German gas storage facilities, some of which were foolishly sold to Gazprom, are only about 30% full.<\/p>\n
Bottlenecks possible due to high energy prices<\/strong><\/p>\n In the forestry and timber industry, this is reflected in the sharp rise in fuel and energy prices. Forest contractors are rightly demanding higher rates for diesel. According to the German Sawmill and Wood Industry Association e. V. (DeSH) to fear price increases through to delivery bottlenecks, especially for companies that do not operate their own biomass heating plants<\/p>\n According to DeSH, foreign trade with Russia plays a subordinate role for the domestic sawmill and timber industry compared to other neighboring European countries. In general, the loss of Russia and Ukraine, two of the world's largest roundwood exporters, will lead to a global shortage of roundwood that needs to be compensated.<\/p>\n Roundwood will be missing worldwide<\/strong><\/p>\n The export bans on logs from both countries, which are already in force, are likely to become more severe as a result of the war. Austria's HS Timber cited them as the reason for the closure of its Radauti sawmill, located in Romania near the Ukraine border. One scenario is that China will immediately satisfy its thirst for wood in Europe due to the lack of volumes from Russia.<\/p>\n Unofficially, it is said that the implementation of the Russian export ban, even to the west, is only half-hearted. Given that Russia's President Putin is looking for fraternization with China, one can imagine that the export ban in this direction may not be implemented at all. The further market development remains to be seen.<\/p>\n Russian timber exports<\/strong><\/p>\n In any case, a massive obstacle to trade with Russia is the exclusion of Russian banks from the SWIFT system. This makes payment transactions more difficult, if not impossible. The US industry service Wood Resources International (WRI) sees world trade adversely affected in the coming months. Shipments of forest products around the world must be stopped and diverted. Trade with Russia will decrease drastically.<\/p>\n In 2021, Russia was the world's largest exporter of softwood lumber, valued at US$5.8 billion. The export value of all forest and wood products amounted to a good US$ 12 billion. The European Timber Trade Association (ETTF) thinks it is possible that forest and timber products will not be subject to the sanctions imposed by the EU and the US, as they together make up only 2.4% of Russian exports.<\/p>\n There will be no investments in Russia<\/strong><\/p>\n One argument for the ban on roundwood exports from Russia, which came into force on January 1, 2022, was to keep the added value in the country. However, this would require investments that are now very unlikely to materialize, especially since technology products, which should also include sawmill technology, may no longer be imported. For example, Russia can neither export its logs nor process it in its own sawmills and export it as sawn timber. This is doubly damaging for the world market<\/p>\n So it remains to be said that the Central European forestry and timber industry is not directly affected by Russia's war against Ukraine. Higher energy costs hit the economy as a whole. This shows that Germany must become less dependent on external energy suppliers. The DeSH therefore proposes the establishment of a strategic pellet reserve, analogous to the strategic gas storage facilities.<\/p>\n Whether and to what extent Russia actually implements its export ban on logs will determine how the world market for wood will develop and whether demand from China for European wood will increase drastically.<\/p>","protected":false},"excerpt":{"rendered":" On February 24 Russia invaded Ukraine. Apart from the fact that the previous security structure in Europe was being turned upside down and that a war of aggression was being waged for the first time since World War II, this … Continue reading