Russia Wood Factory Grows

Russia has for many years been, by far, the largest exporter of logs in the world. When the country announced a log export tax of 25% in 2007 and the intention to increase this tax to 80% in 2009, many forest companies in Asia and Europe decided to reduce their reliance on Russian logs. As a result, total log exports from Russia fell from 51 million m3 in 2006 to about 22 million m3 in 2009 and 2010, according to Wood Resource Quarterly of Wood Resources International LLC.

This downward trend, however, appears to have been broken in 2011. During the first few months, total softwood and hardwood log exports have been up by almost 40% compared to the same period last year. Much of this increase in shipments has been to China, Finland and Japan. This recent upward trend can be expected to continue during 2011 and 2012, albeit less dramatically, as Russian log export taxes are reduced. During discussions between Russian and EU representatives in December last year, it became clear that Russia has been pressured to reduced log export taxes if the country wants to join the World Trade Organization (WTO).

It is still not clear exactly what the new log export taxes may be and when they will be implemented, according to the report. Softwood log taxes may fall to somewhere between 5-10%, and hardwood log taxes will probably be lower than those for softwood. The lower tax rates are not likely to be instigated until Russia has been recognized as a full member in WTO, which may not be until early 2012.

Russia has not only increased its exports of logs but also of softwood lumber. From 2008 to 2010, exports were up 18%, reaching an all-time high of 17.5 million m3 last year, according to Wood Resource Quarterly. So far this year, exports have been over 50% higher than the same period last year; 2011 may very well be a record-year.