Uncertain Times for Timber Imports

David Hopkins, CEO of Timber Development UK, examines the impact that sanctions on trade from Russia and Belarus will have on the UK timber industry.

The Russian invasion of Ukraine has, quite rightly, dominated news headlines and debates in recent weeks and we join millions of others in hoping that a peaceful resolution can be found quickly to end the humanitarian crisis. It is important as an industry, morally, but also financially and reputationally, that money from the timber sector is not attached to the invasion of Ukraine.

Many of our members, as well as multiple global corporations, have made the decision to cease trade with Belarus and Russia. In line with global sanctions, and in support of the positions taken by members already, we are advising all members of Timber Development UK (TDUK) to cease trading with Russia and Belarus if they have not done so already. We recognise, of course, that for some this will not be easy, but the risks of continuing to trade with Russia and Belarus are extremely high, both financially and reputationally.

On 7 March 2022, TDUK chaired a pan-European meeting with the leading timber and sawmilling associations to co-ordinate a single response to the situation from the timber industry across the continent. At the meeting there was unanimous support for the sanctions imposed on Belarus and an expectation that these measures would soon be extended to Russia.

While Russia is not a major exporter of timber directly into the UK, the flow on effects of ceasing trade will likely be significant for some products and sectors. Russia, Belarus and Ukraine are major global exporters, and account for about 10% of the softwood trade in Europe. Some product groups such as birch plywood, and larch cladding are near wholly sourced from the region.

In most cases there are alternatives to Russian imports, though we expect to see some categories remaining under strain in the short to medium term. As the UK does not import any Russian logs, we believe most impact will be on the sawn wood and panel products sectors. Though restrictions may also impact customer confidence and overall demand in the wider sector.

Initially we expect that the joinery sector will be particularly affected while construction will be relatively unscathed – given Russia is not a major source for structural softwoods. However, the impacts of this conflict may not always be direct. Consumer confidence, which is key to demand for timber products, may also take a hit.

In 2021, the UK directly imported 492,538m3 of softwood from Russia, which represents 5% of softwood imports. Belarus and Ukraine are small sources of softwood into the UK. Structural softwoods for the construction and housing sectors are likely to see little impact, as Russian raw materials are not common sources for these products. But we anticipate increased demand for Scandinavian joinery redwood and whitewood, which will place upwards price pressure on these products and could start to pull logs away from the structural softwood sector.

Swedish and Finnish sawmills can also provide alternative supply chain options for joinery redwood and whitewood, albeit likely at higher costs. Siberian larch for external cladding is another product which will be impacted. However, it is difficult to ascertain exact volume or value information, as much of this material is sorted, kilned and sometimes processed in EU member states before entering the UK.

In 2021, the UK imported 8,359m3 of Russian hardwoods, representing 1.6% of hardwood imports. Direct imports of hardwood from either Belarus or Ukraine are again significantly smaller. While small amounts of hardwoods are directly imported from Russia or Belarus, indirect imports of hardwood products from Europe may be significant for some species. Ukraine is also a major hardwood exporter, and in some estimates may account for as much as 20% of the import market for Oak into Europe.

Panel products
In 2021, the UK imported 68,600m3 of hardwood plywood from Russia, most of which is birch plywood. This represents 6.3% of hardwood ply imports and is the largest single product category which will be directly affected. There are few direct imports of softwood ply and OSB products.

It is difficult to ascertain the full impact of trade restrictions on panel products due to the processing these goods undergo in other European nations before coming into the UK. The impact on Birch Ply is likely to be most pronounced, as several other European producer nations use Russian input feedstock material before exporting elsewhere.

TDUK already endorses the view of both Programme for the Endorsement of Forest Certification (PEFC) and the Forest Stewardship Council (FSC) that future goods from Russia and Belarus be classified as ‘conflict timber’ and be ineligible for certification or responsible trade. Our world is set to undergo some major changes if the conflict drags on.

Timber Development UK will be providing regular updates on the situation as it develops. Be sure to visit: www.ttf.co.uk as well as our LinkedIn and Twitter pages.

You can read the full feature in the Spring Timber Trader UK magazine

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