a new accumulation of wagons or a new stimulus to production?

The ban on the export of unprocessed softwood and valuable hardwood has long been discussed at the Russian government level as a measure to stimulate domestic production of highly processed products. In late September last year, the President of the Russian Federation decided to stop the export of unprocessed or roughly processed timber from 2022. Explaining the decision to impose a ban, the President of the country stated the need to put a strict ban on uncontrolled export timber. “We have talked about this many, many times. But for this, modern digital technologies must be used even more actively, the federal forest information system must be put into operation, including the state forest register in electronic form in accordance with the common rules for all subjects of the Federation. ” , said the president. .

In his opinion, this will eliminate all kinds of gaps, gray plans, get rid of the criminal component of the forest enterprise and will make the work of conscientious companies and enterprises more convenient. “In pilot operation, the logging system for timber and transactions with it should start operating on January 1 of next year and from July 1 its use should become mandatory,” he said.

For small producers, already suffering from rising export duties, the decision on the impending ban came as a surprise. Representatives of the timber industry said they were not prepared to ban the export of round timber because there was no time to rebuild businesses, even with additional investment. Until new woodworking opportunities are created in Russia, it is impossible to ban the export of round timber, as this threatens to lose part of the economy, market participants noted.

Some expressed the view that such a measure would fall into the hands of large carpenters, who often have a problem with raw materials. But in general, the ban will have a negative impact on the industry, due to the fact that the construction of facilities takes several years and industry participants simply will not have time to reorient themselves to processing during the forecast period.

Andrei Goncharov, vice-president of the National Forest Traders’ Union “Russian Forest”, said that after the entry into force of the round timber export ban, the domestic carpentry industry would be able to occupy only about a third of the remaining volume in the country. 3 million cubic meters.

According to the union, last year exports of soft and hardwood round timber amounted to 16 million cubic meters. From this volume, from 8 to 10 million fall into sawn raw materials and wood pulp, from which sawn wood or wood-based panels can be produced. About 35 billion rubles of investment are needed to process the remaining 7 million cubic meters. Raising such an amount of funds before 1 January 2022 is an extremely difficult task.

At the same time, during the transition from the export of round timber to its processing, the profitability of companies will increase from 4-5% to 20-30%, according to the forecasts of the association.

According to Roslesinforg, exports of timber and forest products from Russia in January-November 2021 in terms of value reached a record $ 12.5 billion, or 38% more than last year. As experts explain, the reason for the growth is the jump in prices. Thus, from the beginning of 2021, the prices of forest products increased by 50-100%. The main reasons for the increase in the price of wood are the reduction of logging in the United States, Canada and Europe and the widespread decline of companies in the midst of the pandemic. Demand is projected to continue to grow next year due to an increase in the number of new homes, an increase in carpentry and an increase in production capacity.

But at the same time, the volume of exports in natural terms increased slightly. For 11 months of this year, more than 40 million cubic meters of sawn timber were produced, of which 31 million were exported. In total, 31.3 million cubic meters worth $ 9 billion were shipped to foreign markets last year.

Russian Railways says that with the introduction of this state regulation measure, the export of timber by rail will have a negative trend. At the same time, the volume of transports of this nomenclature will be partially offset by domestic shipments.

“The logical consequence of banning the export of raw wood should be an increase in exports of wood products,” said a Russian Railways official.

The company also notes that to stimulate this segment, the company has introduced a long-term 35% discount on domestic and export shipments of woodworking products from boxes from the Far East. The discount will be valid until the end of 2025.

It should be noted that at the end of last year, the railways loaded 40.7 million tons of timber (-3.1% compared to 2019). For January-November this year – 38.7 million tons (+ 3.9%).

Earlier this month, Alexei Shilo, Deputy General Manager of the Russian Railways, Head of the Central Economic Services Center, commented on the difficulties in transporting goods across the border with China, noting that new problems are forcing the airline to adjust its actions. the export of raw wood. The changing process for the export of timber from the territory of the Russian Federation aims, as he noted, to stimulate deep processing of timber within the country. “It will be important to prevent the accumulation of wagons with such goods at checkpoints,” A. Silo stressed.

According to Nikolai Cherkezyuk, Marketing Director of Eurosib SPb-TS JSC, at the end of 2021, the structure of timber rail shipments from the Federal Regions of Siberia and the Far East for export via dry border to China is as follows: 42% – shipments of round timber (with a ban from 1 January), 33% – shipments of dry timber in containers, 25% – shipments of raw timber.

The volume of raw wood exported from these areas is estimated at 5 million tonnes. At the same time, if we look at the volume of shipments of these nomenclatures over the last 6 years, (with containers) sawn wood has a steady pace, goes for a long time. “And finally, according to our forecasts, round wood would have already been reduced in the volume of transport in this market in 5-7 years at a minimum. Yes, there are WTO rules, there is a Chinese border infrastructure for the production of first-round wood products, but the transport of finished products in containers on the ground in the Russian Federation, with its obvious export orientation, would still be profitable. the main reason is the Chinese container subsidies) “, explains N. Cherkezyuk.

It is worth noting here that, according to the Russian Railways, in January-November 2021, 547.7 thousand tons of timber (+ 10.1%) were sent through the network of Russian Railways to all types of traffic.

“For 11 months of 2021, the volume of shipments of timber containers on dry border crossings with China (Zabaikalsk, Grodekovo, Zamyn-Uud) increased by 1.5% compared to 2020. The volume of shipments of round timber increased by 13%, raw sawn timber – decreased by 11%, “says N. Cherkezyuk.

According to the company’s estimates, the current capacity of the infrastructure (the above stations in terms of processed trains) is selected at 90-95%. In this context, the owners of large forests anticipate the circulation of rolling stock in the market, which previously dealt with these areas.

“This can lead to a supply surplus and consequently a reduction in supply and rental rates. “The introduction of the ban is a boost to the development of timber processing in the country and the production of high value-added products instead of exporting raw materials abroad,” said Andrey Yudin, Logistics Director of Segezha Group (a vertically integrated timber company System).

Nikolay Cherkezyuk, Marketing Director of Eurosib SPb-TS JSC, reveals this prediction in more depth. The company estimates that up to 6,000 dedicated timber platforms will be on the market (20% of the total timber platform fleet), of which up to 1,000 will be used to deliver round timber to large processing plants in Siberia and the Far East. Up to 1.5 thousand platforms have the ability to operate in the Northwest and Central Federal Regions for the next 2-3 years. Of the remaining 3.5 thousand units. will need 1,000 units. to provide additional volume for the export of raw timber for export to China. The remaining 2.5 thousand units. deleted in the next two years of life.

“The timber platform market will be restructured with an emphasis on the European part of Russia, nothing crucial scary for it (a strong fleet surplus in the Russian railway network in terms of profitability of operators) with the introduction of this ban will not happen. At the same time, if this scenario materializes, the Russian Railways will lose the loaded tariff of 1.5 billion rubles at the moment, which is only 3% of the fare charge for all round and sawn timber on the market (not significant), Comments N. Cherkezyuk.

According to market participants, in the context of the preparations for the transit ban and the closure of the border by the Chinese side, the applications are not fully approved by the Russian Railways, which leads to 100% failure to fulfill the contracts. Logistics are changing and, as a result, market participants are incurring additional costs.

We add that previous curators have also expressed the need to give the company more time to restructure and seek resources for deeper processing, as the announced projects for the construction of new high-capacity capacity are unlikely to be ready by January 1, 2022. In addition, they require not only the attraction of significant investments, but also the acquisition of advanced equipment and technologies. A whole series of measures is needed to speed up the process – legislative, fiscal and infrastructure support.

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