With the impetus provided by the
Russian government, which has implemented regulations that restrict
open trade of logs, Russia is slowly transforming from being a large
exporter of logs to an important producer of primary processed wood
products, as reported by the Wood Resource Quarterly.
The Russian Federal Government is trying to assist development of its
forest industry by adding export taxes on logs, thereby limiting
competition by foreign companies for the Russian timber. As of April
2008, Russian log export taxes for softwood species and large-diameter
birch logs increased from 20% to 25% of the log value (minimum €15/m3
of about US$23/m3). Smaller-diameter birch logs will not be taxed in
2008.
Although the tax increase of €5/m3 is a small share of the total log
cost for foreign sawmills, it has still had an impact on the sourcing
strategies for many forest companies in both Europe and Asia. Despite
continued negotiations amongst the governments of the Nordic countries,
EU representatives and Russian ministers, there has, so far, been no
willingness by Russian representatives to reconsider the announced
increase of log taxes to 80% of the log value (minimum €50/m3 or about
US$78/m3) for softwood species in January 2009. If Finland is not
successful in reversing the Russian export barrier, and if the Finnish
Government does not find a way of compensating the Finnish forest
industry, it is likely that the last shipment of softwood logs to
Finland may leave Russia in late December of 2008.
In the latest issue of the Wood Resource Quarterly it was reported that
as a result of the implemented and planned log export taxes, shipments
of softwood logs from Russia have declined both to Europe and Asia in
2007 and 2008. In the first quarter of 2008, Russia shipped 44% less to
Europe and 15% less to Asia. During the 1Q/08, Russia exported less to
all of its major trading partners except China, which increased
purchases by 14%. Softwood log exports are now at their lowest level in
four years. Hardwood log exports, which typically consist of smaller
logs for pulp manufacturing, have not been affected by the higher taxes
on large birch logs and were actually up by as much as 28% in the first
quarter of 2008, as compared to 2007. In 2007, Sweden and Finland alone
imported 89% of Russia’s total shipments to Europe. Other importers
were sawmills in Estonia and Latvia, which increasingly have become
dependent on Russia for sawlogs.
Assuming the log export tax will reach a minimum of €50/m3 from 2009,
global trade of softwood sawlog will change. Sawmills in particularly
Finland, China and Japan will have to find new sources for logs. Some
countries will also have to consider importing processed forest
products rather than logs in the future.
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