Traders fear an influx of cheaper Russian logs could create a big shift in the dynamics of the global softwood lumber market, according to a survey by international newsletter Random Lengths.
Russia’s likely entry into the World Trade Organisation would probably include a steep cut in its 25% log export tax introduced in 2008 to promote domestic processing.
Regions heavily dependent on Russian logs, such as China and Scandinavia, sought alternative supplies from North America and New Zealand. With cheaper Russian logs back on the market, it is believed increased supply could lead to lower prices all round.
“This will be a positive development for producers in Europe, China and Japan and negative for current log exporters to these markets,” one analyst said.
However, many traders believe Russia’s poor infrastructure is a wildcard in the issue as it constrains the country’s ability to harvest logs.
One trader added: “World demand in the coming years will require wood supplies from every corner of the globe, particularly when US housing returns.”
