Sawlog costs have fallen
faster than lumber prices in Russia the past two years resulting in higher
profitability for the sawmilling sector
The sharp depreciation of
the Russian Rouble has resulted in substantially lower sawlog costs for the
sawmilling industry in Eastern Russia during 2015 and 2016, reports the Wood
Resource Quarterly. Lumber prices in Russia have also declined the past few
years, but not at the same rate as prices for sawlogs, and as a result sawmills
in Siberia have become some of the most profitable sawmills in the world.
Global Timber and Wood Products Market Update
- a news brief from
Wood Resources International LLC
Sawlog costs have
fallen faster than lumber prices in Russia the past two years resulting in
higher profitability for the sawmilling sector, according to the Wood Resource
Softwood lumber production in Russia was practically unchanged from 2014 to
2015, according to official statistics. Domestic consumption fell by almost ten
percent, while export volumes were up from 21.7 million m3 in 2014 to 23.1
million m3 in 2015. The export shipments have continued to go up this year with
volumes during the first six months reaching 12% higher than during the same
period in 2015. By far, the biggest increases in exports have been to China,
Japan and South Korea.
Higher production levels at the sawmills in Siberia and the Russian Far East
have slowly increased sawlog prices (in Roubles) in this region over the past
two years. In the 2Q/16, average log prices were over 20% higher in Rouble
terms than in the 2Q/14, according to the Wood Resource Quarterly (WRQ).
However, since the value of the Rouble against the US dollar has plunged since
early 2014, log costs in dollar terms has fallen by almost 50% making Russian
sawmills very competitive in the global market place.
Very low production costs in Eastern Russia have resulted in major inroads for
Russian sawmills in the Chinese market at the expense of particularly Canadian
sawmills. Russian sawmills' market share in China has reached 58% in 2016, up
from 42% in 2014. It is important to note that lumber import prices to China
have fallen quite substantially the past 12 months, as reported in the most
recent issue of the WRQ (www.woodprices.com). A higher market share
does not necessarily mean higher profitability. But the good news for the
sawmills in Siberia and the Far East is that log prices have declined more (37%
by the 2Q/16), than lumber prices (down 10%) the past two years so the
profitability for many sawmills has gone up substantially.
The wood costs for larger sawmills in Eastern Russia as a percentage of the
lumber export prices, have fallen from a range of 65-80% in 2012-13 to below
50% in 2016 making this region's sawmills some of the lowest cost producing
mills in the world.
Global lumber, sawlog and
pulpwood market reporting is included in the 52-page quarterly publication Wood
Resource Quarterly (WRQ). The report, which was established in 1988 and has
subscribers in over 30 countries, tracks sawlog, pulpwood, lumber and pellet
prices, trade and market developments in most key regions around the world. To subscribe to the WRQ,
please go to www.woodprices.com
Wood Resources International LLC
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