The invasion of Ukraine by Russia will likely halt planned investments in its forest industry, according to Wood Resources International’s (WRI) Market Insights 2022.
Increased sanctions against trading with Russia, and difficulty with financial transactions, will probably interrupt and re-direct shipments of forest products throughout the world, WRI has cautioned.
As a result, trade with Russia will likely decline, impacting long-established international trade flows of forest products.
Countries like China and India, who have reluctantly supported Russia in the conflict, may also be affected by limited trade sanctions, according to the market insights report from WRI .
This development, WRI says, would mainly affect China, which relies on the importation of forest products, including logs, wood chips, lumber, pulp, and paper from North America, Europe, Oceania, and Latin America for domestic use.
These world regions are considering expanded sanctions for Russia and countries that directly or indirectly support Russia’s attack on Ukraine.
Russian exported forest products were valued at over $12 billion in 2021, and imports of paper products (mainly) are valued at about $2 billion, according to Wood Resource Quarterly.
Much of this trade is now in jeopardy, WRI said.
Russia is the largest lumber exporter, globally, and ranks as the seventh biggest exporter of forest products, worldwide.
Forest products exports from Russia have increased rapidly in the past five years, led by softwood lumber and paper products.
Export value 2021 (billion $US) Change 2017-2021 Softwood lumber 5.8 24 Paper products 2.0 11 Wood panels 1.9 15 Wood pulp 1.3 19 Hardwood logs 0.5 15 Softwood logs 0.5 -52 Wood pellets 0.3 102 Total 12.2 24
Russia has vastly under-utilised forest resources and has the potential to increase timber harvests to supply its domestic industry.
To meet increased global demand for forest products, the Russian government recently initiated programmes to encourage investments in the sector to both expand/modernise existing manufacturing plants and build greenfield facilities.
However, it is likely that many investments projects in the forest products manufacturing sector in Russia will grind to a halt as the growing list of sanctions and financial transaction restrictions take effect.