According to the operational data of the Association of furniture and woodworking enterprises of Russia (AMDPR), in 2022 the volume of production of wood-based panels decreased by 12%, plywood — by 29%. The reason for this decline is a reduction in domestic demand and a sharp drop in exports. The industry needs state support in 2023, otherwise negative trends will only intensify, AMDPR is confident.
According to preliminary data, the volume of production of chipboard and OSB in Russia in 2022 decreased by 10.5% compared to 2021, to 10.3 million m3, fiberboard and MDF - by 12.1%, to 649 million m2. A sharp decline in the production of wood-based panels began at the end of April 2022, when the closure of the main export destinations coincided with a drop in demand for wood-based panels in the domestic market. Because of this, already in May, manufacturers of boards for the first time in 2 years were forced to reduce product prices for both Russian and foreign markets.
"The almost two-year period of producer price growth for chipboard, which began in mid-2020, has ended, since May 2022 there has been a decline in this segment. The maximum value was the April figures, when a cubic meter of chipboard was sold for 18.9 thousand rubles. Already in June, 16.3 thousand rubles were asked for a chipboard cube, which approximately corresponds to the indicator of 2021. In the second half of the year, the downward trend intensified. The same situation has developed with export prices for chipboard. Fiberboard manufacturers lasted longer: they began to reduce prices only in September 2022," notes AMDPR CEO Timur Irtuganov.
Plywood manufacturers were in the most difficult situation in 2022. In this segment, a record drop in output, exports, and prices was recorded in 2022, Timur Irtuganov emphasizes. According to the operational data of AMDPR, plywood production in Russia in 2022 fell by 28.8%, to 3.24 million m3, in some periods the decrease exceeded 40%. "In November 2022, Russian plywood mills reached a ten—year minimum in terms of output and returned to the figures of 2010," said the head of AMDPR. He also pointed out that it was this segment of wood processing that showed the sharpest decline in prices. This trend appeared at the end of April, and already in July the selling price of a cubic meter of plywood fell by 71%, to 39.6 thousand rubles, and has not risen higher since.
The strongest impact on the wood processing industry in 2022 was the closure of exports. "Plywood manufacturers suffered the most from this, which in previous years sold abroad almost 70% of all manufactured products, now exports have halved. The main sales markets for Russian enterprises were the United States and Western European countries, which became "unfriendly" last year. It was not possible to quickly reorient such volumes to the domestic market or to the East, largely due to difficulties with logistics and cargo transportation. The markets of Turkey and India, which are promising for plywood makers, are still effectively closed by barrage import duties: in the first case, it is 27% (until the autumn of 2022, after which the duty was increased even more), in the second — about 30%," explains Timur Irtuganov. He is sure that only the state can help plywood manufacturers to develop new promising markets in the current situation.
In general, Russian wood processing enterprises in 2022 found themselves in a very difficult situation, the AMDPR states. The industry faced several problems at the same time. The most significant of them are the imperfection of the port and railway infrastructure, the transport and road network and legislation in the field of road cargo transportation, which seriously complicates logistics.
"In March 2022, the state froze the rental rates of forest plots at the level of December 2021. At the time, it seemed like a good support, in the short term. But by the end of the year it became obvious that this measure was not enough. In addition, certain structures, for example, the territorial divisions of the Rosselkhoznadzor (state authority), "out of the blue" began to come up with additional encumbrances for business, for example, revising the borders of phytosanitary zones that had existed for many years. As a result, there was an increase in prices for logging. The termination of targeted measures to support exporting enterprises back in 2021 hurt those who were forced to look for new export directions in 2022," Timur Irtuganov lists.
"At the moment when Russian manufacturers of wood-based panels and plywood need money most of all, they are deprived of compensation for exports, and prices for renting plots are raised, and higher than originally planned. Banks, instead of helping the industry, from the second half of 2022 began to evaluate timber industry companies as risky assets and delay making decisions on granting them loans and credits," Timur Irtuganov emphasizes. According to his forecasts, based on current realities, in 2023, manufacturers of wood-based panels and plywood will continue to reduce output. The expected drop in 2023 in the chipboard segment may be 8% of the level of 2022, in the fiberboard and plywood segments — 14%, which will automatically set the industry back 15 years to the indicators of 2006-2007.
AMDPR is confident that in the next 2 years, Russian wood processing will be able to survive and maintain chances for further development only with the help of the state. The Association has developed a set of state support measures and intends to present it at a government meeting scheduled in mid-February.
