Sawmills across Russia are bracing for another year of contraction, as shrinking export markets and a softening domestic property sector combine to squeeze an industry that has already shed a decade of growth in the space of two years.<\/p>\n
According to a forecast from the consultancy Strategy Partners, published in the business daily Kommersant, softwood output is set to fall by a further 2 to 4 per cent in 2026. That would mark the second consecutive annual decline for a sector that has struggled to find its footing since the loss of its European customer base, and which now finds its remaining lifeline \u2014 the Chinese market \u2014 narrowing as well.<\/p>\n
The numbers already on the books make grim reading. Production fell 2.5 per cent in 2025, to 28.5m cubic metres, and the pace of decline has since accelerated: output in the first four months of this year was down 4 per cent year-on-year. Government figures paint an even starker picture of the processing side of the business, which Russia's own Ministry of Economic Development has singled out as among the weakest of the country's industrial sectors. Output there fell 4.3 per cent in the third quarter of 2025, before the decline widened sharply to 7.8 per cent in October.<\/p>\n
Mikhail Yulin, deputy industry and trade minister, did not mince words when he addressed the Federation Council on the matter, telling members that the timber sector had entered \"a downward spiral.\" His worst-case projection \u2014 a decline of 20 to 30 per cent in 2026 \u2014 would amount to something closer to an industrial collapse than a cyclical dip.<\/p>\n
Profitability now hinges on the rouble<\/strong><\/p>\n What separates the sawmills still turning a profit from those sliding toward insolvency has less to do with efficiency than with currency. Valentin Gavrilov, business director at Strategy Partners, describes an industry cleaved into three tiers: the strongest operators, largely those supplying planed timber to Japan and making resourceful use of lower-grade logs, are holding sales margins of 5 to 7 per cent; mid-sized producers are hovering near break-even; and the weakest are already running losses.<\/p>\n The rouble is doing most of the work here. Should it weaken past 90 to the dollar, Gavrilov argues, margins and EBITDA across the sector could recover to 10-15 per cent \u2014 a reminder that, for now, the industry's fate is being decided in currency markets rather than in the forests themselves.<\/p>\n China retreats, and the railways aren't helping<\/strong><\/p>\n Exports to China, long the sector's most important outlet, fell 26 per cent year-on-year in the first quarter, to roughly 2.6m cubic metres. Canadian and Belarusian suppliers have been quick to fill the gap, eating further into what remains of Russia's share. Prices landed in Shanghai have held broadly steady \u2014 pine logs between 19,600 and 21,600 roubles per cubic metre, spruce slightly lower at 18,700 to 20,600 \u2014 but steady prices offer little comfort when volumes are shrinking.<\/p>\n Logistics compound the problem. Congestion on the western stretch of the Trans-Siberian line, an overloaded eastern corridor, and slow wagon turnaround are all constraining producers' ability to reach Asian buyers at all, regardless of demand. Some exporters have diverted cargo to Uzbekistan instead, but prices there run 15 to 25 per cent below those in core export markets \u2014 a discount that erodes whatever margin the diversion was meant to preserve.<\/p>\n A structural crisis, not a cyclical one<\/strong><\/p>\n Nikolai Ivanov, vice-president of the Segezha Group, was blunt in his own assessment to Kommersant: the global timber market, he said, has fallen into structural crisis. Russian output is already down 10 to 15 per cent year-on-year, with a further 5 to 7 per cent decline expected by December. This is not, in his telling, a passing market fluctuation but something closer to a permanent recalibration of the industry's prospects.<\/p>\n That view lines up uncomfortably well with earlier warnings that small and mid-sized mills across the north-west and Siberia could be forced to close \u2014 concerns serious enough that the Arkhangelsk region has already imposed a three-year moratorium on bankruptcy proceedings for local producers.<\/p>\n Ivanov's prescription is transformation rather than retrenchment: a shift away from dependence on sawn log timber and toward diversified products such as prefabricated housing kits, cross-laminated timber, fuel pellets, forestry byproducts and textile fibres. He is calling on Moscow to underwrite the shift with low-cost, long-term financing, and to encourage large-scale housing construction and processing operations within special economic zones in friendly countries.<\/p>\n Domestic demand offers little cushion<\/strong><\/p>\n If exports are faltering, domestic demand is providing scant relief. Russia is preparing to revise its household mortgage subsidy programme, with rates for single-child families potentially rising to 10-12 per cent annually. Prime Minister Mikhail Mishustin has described the subsidised scheme as the backbone of Russian housing finance \u2014 it accounted for 90 per cent of all preferential mortgages issued through 2025, and has benefited 1.85m households since its introduction in 2018.<\/p>\n Data from the state housing agency Dom.RF shows just how central the programme has become: of the 1.1tn roubles in subsidised loans issued in the first five months of 2026, household mortgages made up 936bn roubles. Pavel Zolobov, a senior director at the national ratings agency, estimates that tightening eligibility could shrink new lending under the programme by 30 to 40 per cent \u2014 a shift that would further sap what little domestic demand the timber industry has left to lean on.<\/p>","protected":false},"excerpt":{"rendered":" Sawmills across Russia are bracing for another year of contraction, as shrinking export markets and a softening domestic property sector combine to squeeze an industry that has already shed a decade of growth in the space of two years.<\/p>","protected":false},"author":1,"featured_media":99364,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[5204],"tags":[],"class_list":["post-99363","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-daily-news"],"acf":[],"yoast_head":"\n