Summary
• Russian redwood quality and specification have improved.
• Supply is tight.
• Some plywood mills have orders through to January.
• FSC Russia has produced a list of certified timber for use in the 2014 Winter Olympics.

There was a time when UK importers regarded Russian redwood production as a budget product, and Nordic brands always commanded an extra premium. But in today’s market, the situation has turned to the point where some Russian sawmills are out-classing their rivals on quality and specification. This is particularly the case where Russian mid-range quality in fourth/B grade is showing a better bracking consistency than some of the Nordic fifths.

A number of importers have commented on the quality of fibre from some producers in Sweden and Finland where they say quality has been sliding. The main complaints are focused on knot size and an increase in the presence of loose dead knots in brands that were previously relied on for a consistent standard.

Producers in the Russian areas of Archangel and Onega, as two examples, are perceived by importers to be maintaining a reliable and high standard supply to the UK across all grades. The shippers are not letting the opportunities afforded by other markets influence the quality they ship to the UK, even though customers in countries such as north Africa will accept a wider grading spectrum and easier specification at higher price levels.

Tight supply

In spite of global uncertainty in demand, importers are finding Russian softwood supplies are tight and there are no significant unsold volumes on the market. As far as prices are concerned, there are no cheap offers on the forward market and mills are confident that they can sell most of their production.

The only ‘give’ in price is to be found in the UK as some distributors faced with falling demand may be turning landed stock into cash. Traders are finding the UK market in a nervous state with uncertainties in demand, and many merchants are buying the absolute minimum quantity they need on a just-in-time basis. In spite of this, some wholesalers have managed to obtain reserves on forward shipments and have pre-sold significant percentages of cargoes to arrive over the month ahead.

Hand-in-hand with redwood and whitewood volumes, Russian Siberian larch sales are strong in the UK, and one importer said the emphasis was on “allocating stock” rather than selling it.

Overall, however, sales volumes of softwood are declining and a very tough market has been developing over the course of the year. A big worry for timber distributors is the fact that some customer payments are falling behind and this is putting pressure on cash flow. Irrespective of how long their customers are taking to pay, the large importers are still obliged to pay their shippers promptly.

Raw material prices

On the supply side, Russian sawmills are being squeezed due to an ever-growing global log market, which is pushing up the price of raw material. In Siberia the demand for roundwood from China is increasing, while demand for wood fibre as an energy source is forcing up fibre costs to the point where local sawmills can not compete.

In the plywood market, Russian birch producers are well sold, with some mills booked as far ahead as January. This is also the case with Latvian birch producers who are sold out for the same period and are steadily increasing their prices.

The further development of global markets is generating consistent demand for birch plywood, leading to a good balance between supply and demand. In the UK, stocks are said to be on the low side and prices are remaining firm, but there is no great momentum. One agent said that as things stand there is a good balance, but any increased demand would lead to gaps in specifications that the mills would not seek to fill by increasing production.

While plywood shippers are enjoying a balanced market, UK distributors are dealing with the difficulties of cash flow and the need to keep a tight control on inventories.

Birch log prices are facing the same pressures as softwood sawlogs, and Russian plywood mills are having to compete for fibre against biofuel enterprises and manufacturers in China, Australia, South Africa and the Far East.

Forest area

Figures produced in 2010 for the UNECE put Russian Federation forestlands at a total of just under 810 million ha, an almost constant figure for the last 20 years, including virtually 17 million ha of planted forest. Of that total, over 415 million ha is designated for forest products production purposes.

Russian forest management is improving its image by expanding its area of certification. Over 320,000ha of forestland north-east of St Petersburg have now been PEFC certified.

And in a recent release, the Ilim Group announced FSC accreditation of its stands in the Archangel region, taking the Group’s total forest area (including Siberia) to 5.2 million ha.

FSC Russia has produced a list of certified timber for use by contractors involved in constructing structures for the Winter Olympics to be held in Sochi in 2014. Olimpstroi, the state-owned enterprise responsible for the event, has laid down a set of ‘green’ standards for the use of timber and wood-based products. This is the first time such a criteria have been put forward, and the standards are expected to lead to wider use of certified timber by Russian specifiers and contractors on other projects.