Op\/Ed by\u00a0Chris Devonshire-Ellis<\/p>\n\n\n\n
Russia\u2019s export lumber log trade is set for some huge changes with a ban on Russian exports on the cards with a new law coming into effect next year.<\/p>\n\n\n\n
Russia exported 15m cu m of logs in 2020, accounting for almost 12% of globally traded roundwood, according to a new report from\u00a0Wood Resources International.<\/p>\n\n\n\n
Much of that trade could come to a halt next year when a new law proposed by Vladimir Putin will ban the exportation of softwood logs and high-value hardwood logs as of January 1, 2022. The Russian government is also considering new regulations aimed at reducing the exportation of green softwood lumber. This regulation is loosely planned to also commence in 2022.<\/p>\n\n\n\n
The ban is expected to be enacted into law in the second quarter of this year. The biggest impact from the ban will be felt in China, which is a huge buyer of logs from Russia\u2019s Far East region. The city of Manzhouli, in China\u2019s northern Inner Mongolia Province could be especially hit as it is on the Trans-Mongolian rail route and brings in massive amounts of timber for processing on a daily basis. Numerous wood processing facilities are based there with the city even operating a Lumber Exchange to regulate timber prices. Cities on the China-Russia railway routes such as Manzhouli will have to research the Russian markets and evolve away from a dependence on timber and themselves look at how to add value to China-Russia trade, and especially within the services sector. Beijing is aware of this; Manzhouli was included in a grouping of\u00a0cross-border e-commerce pilot zones in 2020\u00a0which offer the city new facilities in preferential tax policies, such as exemption of VAT and consumption tax on retail exports and reduction of Corporate Income Tax. Clearly, the business model run by companies in Manzhouli needs a rethink although the incentives to do that are there.<\/p>\n\n\n\n
China will probably look to source more sawlogs from other regions of the world, such as Oceania, Europe, and the United States. Longer term it is expected that China will evolve from importation of roundwood to importation of lumber.<\/p>\n\n\n\n
The Russian President ordered the government to strictly control the exportation of roundwood and low-value forest products, clamping down on the illegal trade of logs, and requested a \u201ccomplete ban on shipments of unprocessed or roughly processed conifer and valuable hardwood out of\u00a0Russia\u00a0by\u00a0January 1, 2022.\u201d This statement would indicate that lower-value hardwood logs, such as birch pulp logs exported to\u00a0Finland, may be excluded from the future export ban. The ban is to encourage the\u00a0domestic processing of Russian timber, and have Russian businesses adding value rather than those across the border. It is also intended to implement a government program of subsidized loans for investing in wood processing facilities, mainly in\u00a0Siberia\u00a0and\u00a0Russia\u2019s\u00a0Far East, targeting the growing wood markets in\u00a0Asia. These industry loans would be available for facilities producing lumber and panels, and pellet manufacturers which predominantly use small-diameter logs for their wood furnish.<\/p>\n\n\n\n