Trade routes at the crossroads: where NWFD will transport oil, timber, ferrous metals and fertilizers | Saint Petersburg

Due to the special operation in Ukraine, the countries of the European Union and the United States are introducing one package of sanctions after another. They touched on logistics and a number of goods. In addition, exports are also affected by internal restrictions on exports of certain products. FederalPress, along with experts, found out how businesses in the Northwest Federal District face the challenges of sanctions: where, to whom and how they will supply under the new conditions.

Where will the forest go?

The Ministry of Industry and Trade proposed a ban on the export of wood and certain types of wood products to unfriendly countries by the end of 2022. Also, from 9 April 2022, EU countries refused to buy wood and wood products, charcoal, wood pulp and others. wood products in Russia. Exceptions are contracts concluded before this date. In these cases, a transitional period will apply until July 10, 2022.

Areas in the Northwest Federal District exported timber and pulp and paper products in different volumes. Thus, in 2021, the Arkhangelsk region sold these products for $ 1.5 billion, the Leningrad region – $ 817 million, the Komi – $ 726.3 million, the Karelia – $ 711 million, the Vologda region – 690 million dollars, the Novgorod region – 309 million dollars.

As the Vice President of the Union of Manufacturers and Exporters of Wood of Russia noted in FederalPress Andrei Froloff Non-friendly countries are not all importers of timber. “The main importer of timber is China, so part of the production will be redirected there. At what prices and how much is the second questionhe explained.

According to him, as the Swedes and Finns will supply timber to Europe, they will reduce their exports to China. The expert expressed the hope that these volumes will be offset by Russian supplies. However, he noted that it is important to solve the problem of logistics to China. In addition, there is a problem with shopping for some wood products, such as plywood.

Due to export problems, the chairman of Delovaya Rossiya’s Pskov regional branch complained about the timing of logging workers Stanislav Osowski.

According to him, a more advanced wood treatment, including the development of a furniture group, could become a viable solution for all regions of the North-West Federal District, which previously exported wood to Europe. However, this requires the purchase of additional equipment. “The issue of the equipment market is very serious. It is forbidden to export cash, even for purchase, and payment by bank transfer is extremely difficult. Projects for the development of production are threatened “said Osowski.

In the meantime, the expert explained that the Ministry of Economic Development is dealing with the solution of the problems that have arisen, both at the national level and in the regions. “The help is felt. I hope these shades are temporary. “Even if no optimal solutions are found, it means that we will look for other ways of development,” said the industry representative.

How is the chemical industry doing?

Even before the arrival of Western sanctions, the export of Russian fertilizers was limited from within. As of December 1, 2021, the Russian government has introduced quotas for the export of nitrogen and compound fertilizers as one of the measures to curb rising food prices. The European Union itself did not import Russian fertilizers for imports, however, the general confusion with logistics and the application of sanctions on Russian cargo did not bypass the industry, causing a sharp drop in exports, writes Interfax.

In the northwest, the Novgorod region is mainly engaged in the supply of fertilizers abroad, which in 2021 exported 6.2 million tons of this product for $ 2 billion, the Vologda region, which sold 5.6 million tons of fertilizers abroad for 2 , $ 3 billion. The Leningrad region exported chemicals, fertilizers, rubber (23.8%) for almost $ 2 billion.

Despite the sanctions, PJSC Akron, a company based in Novgorod, retains its position. President of the regional branch of the all-Russian public organization “Business Russia” Yuri Veseliev told FederalPress that the value of the shares of the producers of mineral fertilizers in relation to the 18th of February restored the values ​​faster.

In addition, Veseliev noted that Acron has a distribution network in China, but the company has focused on the domestic market since 2020: deliveries to Russian farmers are growing every year. In addition, the agency has also discovered markets for chemicals, for example, the production of liquid oxygen for medical purposes – the first batch of 20 tonnes has already been shipped.

How the sanctions affected ferrous metal exports

The state of the ferrous metal market is affected by government measures and Western sanctions. Export duties – up to € 290 per tonne – and logistics problems have reduced exports of scrap products, industry officials say.

“Such a duty will not allow exports to continue while maintaining the same level of profitability. For some metallurgical companies using scrap metal as a raw material, the European market is necessary, for example, in 2021, 34% of Severstal’s revenue came from Europe. Northwest worked mainly for exports – up to 90% of shipments, – an expert from the Delovaya Rossiya branch in St. Petersburg and the development director of Export Group LLC told FederalPress Maxim Poletaev.

In terms of logistics, scrap exporters face a complete blockade of exports via the Black Sea and deliveries through the ports of St. Petersburg are also almost completely blocked.

Meanwhile, the Vologda region sold 4.3 million tons of ferrous metals abroad for $ 3.4 billion, and St. Petersburg sold 2 million tons of metals for $ 1.5 billion. The Kaliningrad region sends 230.4 thousand tons of metals for $ 135 million, the Pskov region sends 141 thousand tons of ferrous metals for $ 57.9 million.

According to Poletaev, today the EAEU countries and, first of all, Belarus, are of particular importance to scrap metal suppliers. There is also a great demand for scrap in Turkey and other Asian countries. However, the expert noted that at present only logistical solutions are being developed. Rail transport of metals is expensive. In addition, Russian Railways can not meet the business demand for gondola cars.

What is the fate of Russian oil?

In 2022, the United States and Great Britain have already imposed an embargo on the supply of Russian energy carriers. EU countries are also already preparing the sixth package of sanctions, which will affect oil imports from Russia. The question of what exactly the restrictions will be is still being worked out.

In 2021, St. Petersburg exported $ 45.3 million tons of oil and petroleum products worth $ 20.5 billion. The Leningrad region sold 7.5 million tonnes of petroleum products and fossil fuels for $ 4.1 billion. The Nenets Autonomous Okrug also shipped $ 2.3 million worth of $ 1.1 billion worth of oil abroad. The neighboring Komi Republic, which sold overseas, shipped 1 million tonnes of oil and earned $ 443 million.

Director of the training program “Economics” NZIU RANEPA under the President of the Russian Federation Artem Golubev Russia noted in FederalPress that if the EU countries completely refuse Russian oil, there may be problems in our country, both with the sales markets and with the logistics. The expert suggested that friendly countries – China and India – may refuse to supply Russian oil for fear of being sanctioned for trade with Russia. Also, the sale of oil itself is based on logistical problems. In the northwest, for example, gas terminals within the borders of St. Petersburg and the Leningrad region do not actually operate, as Russian cargo cannot pass through the territorial zones of enemy states.

Meanwhile, the General Manager of Attika LLC, which is a partner company of the Leningrad Regional Chamber of Commerce and Industry, Matvey Rammo told “FederalPress” noted that their company plans to export petroleum products to the countries of the Middle East, North Africa and the CIS countries instead of Lithuania, Poland, Italy and Spain. “Export reorientation did not particularly affect the product line, as our products are widely used in the oil and gas and petrochemical sectors and often the technical specifications we receive are identical, regardless of the country. Materials (sealants, insulators, paint and varnish compositions) are used everywhere the same »noted Rammo.

Despite the growing sanctions imposed by Western countries, Vice-President of Regional and International Development of the Skolkovo Foundation, Lecturer at the School of Technological Entrepreneurship at Synergy University Yuri Saprykin shared with “FederalPress” rather optimistic forecasts. “I think in two to three months, financial flows and supply chains will be rebuilt. “We are already seeing companies opening up legal entities in Kazakhstan, Armenia and Dubai, thus resolving their internal issues.”noted the expert.

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