I came out of the forest. Foreign timber traders cut the branch on which they sit

Several large foreign companies holding timber assets in Russia announced this week that they are suspending their activities in our country. The decision was made against the background of recent events in Ukraine. Analysts differ: some believe that foreigners will keep their word and leave, others believe that they will look for opportunities to stay.

This week, several European timber traders announced the closure of production and sales in Russia, as well as the cessation of imports from the country. The Finnish-Swedish company Stora Enso, through its President and CEO Annika Breska, announced the closure of three corrugated packaging plants and two sawmills in Russia, which collectively employ about 1.1 thousand people.

Swedish company IKEA, which has two plants in northwestern Russia – in the Leningrad and Novgorod regions – has suspended production and sales for three months.

Cessation of production and operations of the Finnish company Metsa in the Podporozhye region of the Leningrad region. Vyacheslav Kanatov, general manager of Metsä Svir, told Novyi Prospekt.

Finnish UPM timber also ceases to operate in Russia. “UPM temporarily suspends deliveries to Russia. “UPM companies will keep Russian customers and suppliers informed of the situation,” the company said in a statement. In Russia, the company employs 800 people, most of them in a factory in the Novgorod region. At present, the business activity of this company is continuing normally, the company said.

Other foreign-owned companies continue to operate in the Leningrad region. Andrey Shik, General Manager of MM-Efimovsky LLC (owned by the Austrian Mayr-Melnhof Holz GmbH), stated that the company is operating normally, but there is a possibility of supply disruption due to supply chain interruptions and difficulties in transporting containers by sea (In particular, the Danish company Maersk stopped accepting orders for transhipment of containers with basic goods through the ports of St. Petersburg, Kaliningrad and Novorossiysk. – Note “NP”). “It will not be possible to work endlessly for the warehouse, it is not rubber,” explained Andrey Shik.

And in a letter to International Paper, owned by Svetogorsk Pulp and Paper Mill, to the counterparties (available from Novy Prospekt) It is said that the company faced interruptions in the supply of raw materials from Europe critical to the production processes. In addition, the supply of raw materials for the production of pulp is reduced. “As a result, there is a strong possibility that the paper production at the pulp and paper factory in Svetogorsk will be suspended,” the letter said.

The work continues. And also for export

Russian-owned companies continue to operate in the Leningrad region. The head of one of the sawmills says that the company’s timber is still in demand in Europe.

The General Manager of the Runko Group Alexander Oshkaev said that the company has reduced the volume of wood processing, as part of the products are produced for IKEA.

“However, we process wood for our own needs, which is more than half of the total harvest volume of our farm,” he added.

Runko Rroup produces gaps for the production of furniture for export (Baltic countries, Norway, Poland, Great Britain), as well as furniture under its own brand for the domestic market.

“Export sales are going well. “There are some difficulties with deliveries and payment, but we are working,” Alexander Oshkaev commented.

At the same time, experts note that the production of sawn timber in Russia has always been export-oriented. That is to say, all the major sawmills in the Leningrad region have either already faced, or are about to face, the need to suspend production.

No one plans to reorganize to work in the domestic market, as the demand for it is not very high. In addition, there are simply no capacities in Russia that can process all the raw materials harvested, the Novy Prospekt interlocutors explain.

In the Leningrad region, in addition to the IKEA plant in Tikhvin, the companies of the Metsa group, MM-Efimovsky, Lesplitinvest (PG Soyuz) were also at risk. Each of these companies has a processing volume of 200-300 thousand m3 of wood per year and even more. each of them employs about 500 people. If these factories stop, at least 2,000 people will lose their jobs. Some analysts believe this is exactly what is happening.

“If companies make official statements about stopping production or leaving Russia, it’s all serious,” said Artem Lukichev, an analyst at Lesprominform magazine. But, according to him, now companies will not be able to sell businesses. “Russian companies will certainly not be ready to buy assets in the current situation at the current exchange rate of the euro and the dollar,” adds Artem Lukichev.

A drop of optimism

Among the experts there are those who believe that foreigners will not leave the complex of the timber industry. “Give it time. I think that by May this flash mob for a show’s exit from business in Russia will be over. Some investors will change their minds and stay,” one of the Novy Prospekt interlocutors is sure.

Alexander Ozerov, General Manager of Priozersky Lesocombinat, doubts that the foreigners really intend to leave completely, because they have been working in Russia for more than a decade and have invested billions of rubles in local assets.

Vitaly Lipsky, head of the National Agency for Forest Development and Investment, agrees. “Russian timber processing plants are important raw material assets for foreign companies. In recent years, at least, they have already managed to profit from the devaluation of the ruble, supplying Russian raw materials to their factories in other countries at almost devalued costs. Now, given the further devaluation of the ruble, this raw material will become even cheaper. “They will not have such profitability in the supply of raw materials and in the production of wood and other products anywhere else,” he comments.

“It is now important for companies to fill in the logistics gaps and possibly change the logistics system in the first place,” adds Vitaly Lipsky.

As for the demand for Russian wood products, before the start of the military operation in Ukraine, the market situation was favorable. “Prices for wood and plywood were quite high. Some companies were planning to invest in their development. However, now these plans have been canceled “, says Artem Lukichev. According to him, until recent events, Russian plywood was in demand in the US, Egypt, Germany and sawn timber was actively sold in China, Europe, Turkey and Egypt.

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