birch Plywood streams drain

birch Plywood streams drain

The birch plywood buyers are in big trouble. I bet that nothing this quick and drastic has ever happened on the supply side.

In 2021, Russia and Belarussia exported together 3 Mm3 of birch plywood in round figures. At the same time, the European producers’ exports were 1 Mm3. European producers will continue peeling veneer and pressing plywood as much they can. But the Russian supply will rumble because of sanctions, payment issues, freight issues, you name it. It is hard to predict the length and scale of the plywood shortage, but let’s speculate a bit with numbers.

Over 70% of the Russian birch plywood exports go to western countries. If that trade wouldn’t stop totally but would drop to a half, it would mean a 1.05 million cubic meters reduction on an annual level. That equals 95,000 m3 monthly. That deficit the western producers should try to compensate.

There are around 20 mills producing birch plywood in the western part of Europe. On average, to balance the 95,000 m3 monthly market deficit, each mill should produce 5000 m3 of extra plywood per month. On top of their current production, they would need to load 140 containers more per month. That’s impossible. The capacity utilization was high already before the war started in Ukraine. The western producers have practically no chance to significantly increase their plywood production.

Another big restraining issue is raw material. Even if there would be some spare production capacity, where would the logs come from? This is an acute short-term problem, but also an issue in the long term. The current market would welcome western production increase, but the expansion investments must rely on safe and certain raw material procurement.

For the birch plywood market, the pandemic-era shortage was an easy warm-up for the 2022 turmoil, unfortunately. The customary trade ways are now broken. Hardwood plywood production, trading, and usage are forced to re-arrange. Some suppliers might currently have a strong market position, yet it is everybody’s interest to find a more sustainable plywood market. Just like it is everyone’s interest to end the war in Ukraine.

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