Vladimir Putin Bans Round Timber Export

Russian President Vladimir Putin’s request to fully prohibit the export of round timber starting in 2022 has split the timber industry into two camps, TASS reported citing Kommersant. If major corporations, which often face the lack of raw materials, consider the measure useful, those companies that don’t have processing capacities castigated it as a lethal blow.

The Russian government pledges to support market players. However, experts doubt that the sharp halt of exports will be advantageous for the market, which in any case won’t be able to change in a year, Kommersant business daily writes.

The president’s decision will help increase the volume of deficient raw materials in the country, but will require the government’s assistance to numerous market players, especially in Russia’s Far East, participants of the sector interviewed by the newspaper said. Sources close to the Russian government said that this measure had been a long-awaited one and bringing order to the sector was one of key goals of the new cabinet.

Last year, Federation Council (upper house) Speaker Valentina Matviyenko called for halting the export of round timber, but temporarily until the new Forest Code was drawn up. Russia’s Minister of Natural Resources Dmitry Kobylkin suggested suspending supplies only to China, which accounts for up to 70% of Russia’s export.

One of major timber companies – the Segezha Group – positively assessed the export ban. Managing Director for Implementing State Programs and Forest Policy Nikolai Ivanov noted that the support of processing wood was necessary while the lack of raw materials was evident. The Ilim Group noted that the steps on bringing order to the timber sector were “definitely right.” The prohibition on exporting unprocessed timber will enable domestic producers to increase the volume of raw materials.

However, many players in the sector described the total ban on round timber exports as a dangerous step, which could affect the sector in the Far East. Some sources believe that the blanket export ban would trigger an opposite effect: it is impossible to organize processing within such a short period and more shady schemes will pop up, while budget revenues will decline.