14 April 2010, Seattle, WA (www.PR.com) - Domestic softwood log prices have moved up in 2009 in Russia both in Ruble and US dollar terms. In the 4th quarter 2009, the average pine log prices were over 30% higher than those in the 1st quarter 2009 in US dollar terms (in Ruble terms they were up 15% during the year), as reported in the Wood Resource Quarterly. The major reason for the price jump was that production of lumber and plywood picked up towards the end of last year, and thus the demand for logs was slightly higher.
However, the hardwood log market changed dramatically during 2009 because of the sharp reduction in exports of birch logs to Finland. The export volumes were down by 8.5 million m3, or 72%, from 2008 mainly as a result of reduced demand for hardwood fiber in the Finnish pulp industry. Besides, the Russian government’s ambiguity and lack of clarity regarding the future policies of log export taxes has resulted in reluctance from foreign companies to invest in Russia, and many forest companies are considering other regions for their long-term supply of wood raw-material. In addition to a decline in demand for Russian logs, the wood supply increased in the second half of 2009. The winter was very cold in western Russia in 2009, which was good for logging. More timber is expected to be available in the spring and with substantial log inventories in 2010, costs for both sawnlogs and pulplogs can be expected to decline.
Russia’s Prime Minister Mr. Putin announced last year that the current log export tax for softwood timber will remain at 25% of the log value (with a minimum of €15/m3) for 2010. He also hinted that this tax might be extended to 2011 if the demand for Russian forest products had not improved by that time. The key message in the Prime Minister’s statement was that Russia has no intentions of suspending the export tax altogether as had been requested by the Finnish Government and by the EU.
