Expertise

Effects on forest products markets

Holger Weimar | 08.04.2022

WF Institute of Forestry

Russia and Ukraine play different roles on the international forest products markets. For Germany, they are important suppliers of roundwood, sawnwood, plywood or even wood pellets.

Russia and Ukraine play different roles in the international forest products markets. Russia is a major exporter of roundwood as well as processed products such as sawnwood and planed products, veneers, wood-based panels and wood pellets. Ukrainian exports play a much smaller role in the world market. The main focus here is on sawnwood and planed products, veneer and wood pellets.

In Germany, Russia ranked among the top 10 supplier countries in 2021 for the product groups 'coniferous sawnwood and planed products' as well as 'wood-based panels' and 'wood pellets':

Sawnwood and planed products, coniferous: 17% (rank 2 among importing countries),
Wood-based panels, fibreboard: 2% (rank 8 among importing countries),
Wood-based panels, OSB: 2% (rank 5 among importing countries),
Wood-based panels, plywood: 17 % (rank 1 among importing countries),
Wood pellets: 16% (rank 3 among importing countries).

Table 1 shows that roundwood imports from Russia reached especially low quantities in 2020 and 2021, while imports of Russian coniferous sawnwood and planed products and wood-based panels (esp. plywood) increased significantly. Russia is pushing the domestic processing of roundwood. Since the beginning of 2022, Russia has imposed an export ban on coniferous roundwood and valuable hardwood species, which may further favour domestic processing of roundwood.

Table 1 shows that raw wood imports from Russia reached a low point in 2020 and 2021, while imports of Russian softwood lumber and planed products and wood-based materials (esp. plywood) increased significantly. Russia is pushing the processing of raw wood at home. Since the beginning of 2022, Russia has imposed an export ban on softwood logs and valuable hardwood species, which may further favor domestic processing of raw wood.

Tab. 1: Imports from Russia to Germany

Source: Destatis, 2022
Wood products	2016	2017	2018	2019	2020	2021
Roundwood (non-coniferous) in m³	13.490	26.899	63.292	11.139	2.866	7.350
Roundwood (coniferous) in m³	175.310	86.141	78.417	75.696	29.342	27.896
Sawnwood and planed products (non-coniferous) in m³	5.702	3.681	3.749	4.057	2.074	5.054
Sawnwood and planed products (coniferous) in m³	590.108	600.991	653.794	683.412	766.046	890.079
Wood-based panels in m³	70.690	292.828	334.519	284.869	326.771	308.225
Wood pellets in t	53.538	46.998	24.968	18.040	22.665	57.648
Wood pulp in t	3.274	37.580	26.416	21.506	30.486	38.174

Of Ukrainian exports to Germany, non-coniferous roundwood, coniferous sawnwood lumber and planed products, and wood pellets are the most important (see Table 2). In 2021, imports of each of the above products accounted for the following share of total German imports:

Roundwood, non-coniferous: 11 % (rank 3 among importing countries),
Sawnwood and planed products, coniferous: 3% (rank 8 among importing countries),
Wood pellets: 6% (rank 6 among importing countries).

While imports of non-coniferous roundwood to Germany have been relatively constant in recent years, imports of coniferous roundwood have declined significantly, probably due to the good domestic and Central European supply situation caused by high levels of damaged wood.

Tab. 2: Imports from Ukraine to Germany

Source: Destatis, 2022
Wood products	2016	2017	2018	2019	2020	2021
Roundwood (non-coniferous) in m³	107.357	70.905	65.833	58.191	48.761	56.593
Roundwood (coniferous) in m³	10.480	7.724	7.118	4.225	3.081	4.010
Sawnwood and planed products (non-coniferous) in m³	26.566	20.389	11.845	9.908	10.388	7.628
Sawnwood and planed products (coniferous) in m³	235.590	253.607	259.014	178.027	124.066	132.964
Wood-based panels in m³	1.829	17.667	13.874	15.760	21.858	28.028
Wood pellets in t	18.475	14.719	16.660	19.495	23.480	22.732
Wood pulp in t	—	—	—	—	—	—

However, Germany has a positive trade balance for many wood products: for the product groups 'non-coniferous roundwood', 'sawnwood and planed products' as well as 'wood pellets' and 'fibreboard', and since 2019 also for coniferous roundwood, Germany exported more to other countries than it imported.

Other EU countries also trade wood products with Russia and Ukraine. Especially the countries bordering these countries import wood products. In the receiving EU countries, these imported products are further processed and then either used in their own countries or traded with other EU countries.

Different significance for the global market

Russia and Ukraine are countries that mainly export wood products. Imports of roundwood and wood products play only a minor role (<5% of world trade).

With an export volume of 16.0 to 20.1 million m³, Russian roundwood exports had a significant share in world trade (11 to 15%) in 2016 to 2020. The share of non-coniferous roundwood exports has increased from about 17 to 21%. Exports of coniferous roundwood are slightly declining, partly because of the good, calamity-related self-supply of coniferous roundwood in Europe, and partly because of Russia's objective to process roundwood more domestically. Russian exports of coniferous sawnwood, with shares ranging from 21% (25.4 million m³ in 2016) to 23% (29.8 million m³ in 2020), and veneer, with shares ranging from 11% to 15%, remain to be of greater importance.

In 2019, about 90% of Russian coniferous roundwood exports were traded to China. Other buyers were Kazakhstan (3%) and Japan (2%). The most important buyer of non-coniferous roundwood from Russia is Finland, with volume shares of about 46 to 52%, followed by China (33 to 39%) and Sweden (8 to 9%). The most important customer country for sawnwood (including planed products) is China.

Ukrainian exports are less relevant for the global forest products market. They accounted for less than 5% of world trade in recent years. Among the wood-based product groups, veneers played the most significant role with shares of about 3 to 4% (about 0.2 million m³). Ukraine exports mainly to Eastern European EU countries (including Poland, Romania, Hungary, Czech Republic, Slovakia) as well as Moldova.

What are the effects of rising energy prices?

Holzscheite in einer Garage — When oil and gas become more expensive, firewood use also increases

In principle, rising energy prices initially lead to higher costs in the production of goods. In the forestry and wood-based cluster, this primarily affects the energy-intensive processes, i.e. sawnwood production including drying, production of wood-based panels as well as production of wood pulp and paper and paperboard. Rising prices generally lead to lower demand for a product.

The impact of rising energy prices on the roundwood market can hardly be estimated. Directly affected here is the harvesting of wood as well as the transport of the roundwood. Indirectly, the roundwood market is affected by the substitution of fossil energy sources for electricity and heat generation by fuelwood. According to studies by the Thünen Institute, a direct correlation between energy prices for oil and gas and the use of fuelwood in private households can be demonstrated. If the prices of fossil fuels rise, the use of fuelwood increases.

In the construction sector, cement, bricks and steel are among the materials that are produced in an energy-intensive way. If the production prices of these materials rise more sharply than those of wood, this could result in increased demand for wood products for construction.

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