To put the blame on other ports

The dynamics of reduction of volume of timber cargo transshipment in 2009 set all records. The situation has now stabilized, however, the market participants say there is no point to expect the previous volumes of timber exports - the crisis in the forest industry in Russia is of a systemic character.

The volume of timber cargo transshipment through Russian seaports in 2009 decreased by 34.7%, to 5.8 million tons. According to the Q1, 2010 turnover of timber cargo in general at the ports of Russia increased by 25.6% compared with the same period in 2009. However, if we speak about the North-West basin separately, which has traditionally imported Russian timber and Sweden, continued to decline and amounted to 6,6%. At the same time, the volume of timber cargo in the Southern basin increased by 51% and in the Far East by 24%.
The decline in timber exports can be attributed to several factors: first of all, slumping demand from the wood processing industry in the global financial crisis, and secondly, a high export duty. However, the reasons may be more profound, associated with the exhaustion of capacities of timber procurers due to lack of necessary infrastructure.
 
As Yuri Murashko, CEO of paper factory Scetoch, said in his interview with PortNews IAA, the decline in export timber volumes in 2009 can be attributed to high export duties, but it is not the main reason. “The main reason is that within the area of transport accessibility wood-cutting area has already been developed almost by 100%. And then we should either create an expensive infrastructure, or to switch to plantation model," the expert said.

According to him, volume of timber exports through the ports of North-West continues to shrink because Sweden and Finland moved their pulp and paper industry to Africa, Asia and South America, where the raw material is cheaper and more accessible.

For comparison, in 2008 Brazil produced about 12.8 million tons of cellulose, in 2009 - 16.8 million tons. In Russia production volume only reduces from year to year, and if in 2009 the country produced about 2000.000 of cellulose, which is 12% less than in 2008, then in 2008 the production of cellulose appeared to be 18% less than in 1985. Still, the Russian wood pulp remains in demand in Northern China, the capacity of which was originally intended for the Russian resource base.

According to Valery Pisarev, the General Director of Cherepovetsles JSC, the fall in volumes of timber cargo export in 2009 was affected by the global financial crisis. Prior to September of 2009 the Finns almost did not purchase the wood, demand for pulp reduced. Moreover, in crisis environment high export duties were, in fact, prohibitive ", expert says.

For comparison, in Brazil in 2008 it was produced about 12.8 million tons of cellulose, in 2009 - 16.8 million tons. In Russia production volume only reduces from year to year, and if in 2009 it was produced about 2000.000 of cellulose, which is 12% less than in 2008, then in 2008 the production of cellulose appeared to be 18% less than in 1985. Still, the Russian wood pulp remains in demand in Northern China, the capacity of which was originally built for the Russian resource base.

Currently, he said, the situation recovers, the price of timber for logging operators becomes more attractive, but time is required to recover forest harvesting. In addition, many small collectors left the market, which also creates a shortage of wood on the market. "It is possible that by the fall of 2010 many wood processing plants can stop production. The rapid recovery of exports should not be expected ", - said Valery Pisarev.

What concerns exports of forest in the Northwest region of Russia, expert believes, its decline can be attributed to the lack of purchases from Sweden, which can make with its own timber, and to small producers, who previously gave up to 50% of the blanks, leaving the market.

Noteworthy, in this regard governmental regulation has been recently signed, under which forestry complex gets subsidies in the amount of 650 million rubles, which is two times more than in the period 2008-2009.

According to Deputy Prime Minister Viktor Zubkov, it will reimburse the costs of credits received in 2009-2010 for production of interseasonal timber resources, attract additional loans to the sum of 11 billion rubles, procure additional 6 million cubic meters of wood. "And we consider that it could increase output by 24 billion rubles. This, we believe, is an efficient measure to stabilize the industry, for capacity utilization," Mr. Zubkov said.

Thus, we drive to a conclusion that although some recovery of Russian timber cargo for export could be expected, but its potential is still quite low, especially in the North-West region.