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Experts predict that the Russian plywood market will stabilize by the end of 2022

Experts predict that the Russian plywood market will stabilize by the end of 2022

Release date: August 29, 2022

The plywood industry in Russia was hit hardest by EU sanctions and continued to decline. As exports fell by 16%, the domestic plywood market in Russia experienced overcapacity.

Analysts say this situation may lead to the collapse of small businesses. Even though the government of the Russian Federation has promised to prevent bankruptcy, experts expect that the situation will not stabilize until the end of this year.

According to the statistics of relevant institutions, in the first half of this year, the retail price of certain types of plywood fell by as much as 25%. Specifically, the sales price of 1525×1525 and 10mm thick birch plywood fell to the range of 19000-22000 rubles per cubic meter (excluding VAT).

As explained by experts, this product is one of the lowest profit products in wood-based panels. The price of laminated plywood of 1220×2440 specification and 18 mm thickness is 34000-36000 rubles per cubic meter.

The price drop is the result of the reduction in exports caused by Western sanctions. These sanctions nominally took effect on July 10, but in fact they have been in effect since April. Before that, of the 4 million cubic meters of plywood produced in Russia, 3 million cubic meters were exported, of which 60% were exported to the European Union.

In the first half of this year, the production of plywood in Russia decreased by nearly 1.9 million cubic meters, a drop of 15%. According to the data of the Russian Bureau of statistics, the output of plywood in June was only 2.745 million cubic meters, which was also a historical low.

Some market analysts believe that this downward trend will continue throughout the year. According to the agency’s estimate, the export of plywood in Russia fell by 21% in the first half of this year. Under the current situation, it is not ruled out that some small companies may leave the market.

The reduction of the plywood industry is affecting the entire industrial chain: manufacturers are continuously reducing wood procurement, and suppliers are also continuously reducing wood procurement. Therefore, in the first few months of autumn, wood supply may become scarce and the cost of final products will rise.

Sveza company of Alexei mordashov, also subject to US sanctions, mentioned that all the factories of the group were operating, but the workload was reduced (the capacity utilization rate was only 30-35% at the end of June). This is related to serious external restrictions and the de facto closure of Russian timber industrial products by Western markets.

The Ministry of industry and trade of Russia said that it had learned about the situation of the plywood factory, and each region would report the change of production volume every week. All measures will be taken to prevent the closure and bankruptcy of factories and help these companies tide over the difficult period with minimal loss.

The Ministry of industry and trade is also trying to amend some laws to stimulate exports. On the other hand, it is trying to eliminate the bottleneck in the transportation of goods – providing locomotives and rolling stock (including sea and railway) for timber companies

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