Russia-Ukraine conflict impacts may lead to European sawmillers’ limiting overseas exposure to fewer markets27 April 2022
Softwood market conditions influenced by ramifications of the Russia-Ukraine conflict could result in European sawmillers limiting their overseas exposure to fewer markets that fit their product mix and risk tolerance, according to the latest bulletin from Wood Resources International (WRI).
WRI cited diverse factors causing disruptions on the global trade of forest products, both short-term and long-term which are arising from the conflict, including the reduction of softwood from Russia and Belarus into Europe and potential difficulties of Russian and Belarusian mills being able to quickly shift to other markets.
Sending lumber by ship or rail from sawmills in northwestern Russia to China meets logistical challenges, while the MENA lower-grade wood market region is not viewed in a robust expansion mode.
Also, WRI speculates that due to sanctions the Russian forest industry will struggle to source parts, equipment and finance, which will force even non-sanctioning countries, such as China, to adapt to changes in trade flows.
Longer-term, some lumber-producing companies may consider investing in new production capacity, although log supply in many regions of Europe is becoming tighter.
In addition, the major overseas markets (China, the US, Japan, and the MENA region) are diverse in product demand, price acceptance, exchange rate volatility, political stability and consumption outlook.
WRI’s bulletin predicts tightening lumber markets globally.