Scarcity of birch veneer logs in Russia

Russian wood consuming companies are facing more and more challenges, during 2013-2017, birch veneer log prices increased by over 75% in local currency (in euros growth amounted to 16%). Furthermore, the leading Russian mills have to pay price premium on top of the general log prices. In order to secure sufficient volumes, some Russian plywood producers are forced to haul the logs from as far as 1 500 km away. There are several reasons as the cause of this situation:

Firstly, the consumption balance of different wood assortments in Russia is uneven. For example, while birch plywood mills consume over 9 million m3 of logs annually, birch pulpwood consumption is considerably lower. Harvesting companies are forced to allocate significant share of their costs to birch logs, and no large birch pulpwood consuming investment projects are in the end of their pipeline.

Secondly, birch veneer logs exports are escalating rapidly. Birch veneer logs export volumes from Russia are estimated at 1.5-1.6 million m3 in 2016 China is the leading buyer followed by neighboring Finland and then Latvia. Recent analyses of Russian exports in the first half of 2017 demonstrate further growth of birch logs exports. Surprisingly there is also increasing volumes from the European part of Russia with strong domestic birch plywood industry. The exports are seen as considerable threat for logs sufficient availability and price level by the Russian plywood industry.

Thirdly, easily accessible forest resources are coming to an end in Russia, leading to drastic cost increase in harvesting and logistics.  As no major infrastructure investments are carried out on regular basis, unutilized forest resources are located further and further from the roads.

With increasing shortage and higher prices in Russia it is likely that this will further support the increasing birch prices in the Baltics as well.