Growth of wood pellet production in Russia by 34.1% in 2017

Favorable export markets in 2017 formed a steady growing demand for the main wood based products in Russia, according to the report ‘Russian Forest Based Industries in 2017’. At the same time, the turn of the Russian economy from a recession to growth (GDP grew by 1.5%) led to a revival of demand for products aimed at the domestic market.

In 2017, Russia sharply increased the import of woodworking machines (+ 60.7%) after a decline in 2016 by 15.6%. This may indicate that the wood processing companies have adapted to the current exchange rate of the national currency. Investments in fixed assets in the production of paper and paper products increased by 33.3%, and in wood processing (excluding furniture production) – by 5.5%.

The process of changing the structure of exports from raw materials to wood processing products continues: in 2017, log exports from Russia decreased by 1.6% with an increase in lumber exports by 10.1%. The largest external consumer of Russian forest products is China. In 2017 the share of the country in the Russian exports of logs was 66%, in the exports of lumber – 55%, in the supply of pulp – 58%.

Overproduction in the Russian MDF market has led to an increase in exports of these products in 2017 by 36.1% compared to 2016 and almost 2-fold relative to the level in 2014.

Growth (+34.1%) of production of pellets in Russia in 2017 in the coming years will continue at a rapid pace, as both Russian and foreign companies are planning to launch new production facilities.

The increased attention of the state to the development of the forest based industries in 2017 and the beginning of a number of incentive measures for the development of wooden housing construction can contribute to the growth of demand for lumber in domestic market in the perspective of 3-5 years.

The development of Internet commerce in Russia weakly stimulates demand for cardboard packaging inside the country. The manufacturers of cardboard packaging in China win from the growth of Russian Internet trade. China accounts for 90% of goods purchased by Russians on the Internet.