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In the Russian lumber market, market participants remained dominated by negative sentiment, which was reflected in weak business activity and falling prices. The timber market remains under severe pressure as the future of finished timber sales from mills remains highly uncertain.

In addition, compared to the previous month, the large-scale wood-based panel, particleboard, oriented strand board manufacturers began to experience a negative situation. A Russian lumber mill said product sales were much worse than the previous month to a month and a half ago. This is mainly due to the decline in the purchasing power of the population and the decline in the real income of the population. Buyers go into savings mode. Manufacturers pointed out that even the start of the construction season OSB sales were much lower than expected.

Over the past two months, the logging industry has become increasingly pessimistic as new news emerges and uncertainty increases in the near term. In April, the EU announced a ban on timber products from Russia (all products belonging to HSCode 44 group). From July 10, 2022, sawn timber, wood pellets, various types of wood-based panels, round logs, etc. may no longer be imported into the EU.

The situation for the birch plywood segment is the most challenging, as 2-3 of the Russian Federation's ots production is exported. The top three sources of Russian birch plywood imports are Europe, the United States and Egypt, and direct exports to the first two destinations will now be closed, meaning plywood mills will have to recycle 2 million cubic meters of product (based on 2021 production) Target other markets or reduce production. In the current situation of limited and expensive logistics, this problem cannot be solved quickly.

Despite the extremely difficult task faced by timber traders, the attitude of the industry is positive and innovative. Industry players submit proposals to decision-making authorities on developing domestic demand for plywood and other products, issuing government contracts and stockpiles of wood industry products, and measures to stimulate consumption in the Russian market. However, this is not a quick process. At the same time, in April, plywood factories actively introduced a quota system, stopped third-party purchases, and greatly reduced purchase prices.

Almost all Russian plywood mills have cut prices, with some exceptions. Many raw material suppliers mentioned that the accounts receivable amount was increasing because the plywood mill did not pay for the veneer logs supplied.