To understand the dynamics of development of the logging industry, it is advisable to start from the data of 2021, which was the peak year for the timber industry. In this year, the timber industry was on the upward trend, timber products were actively shipped for export and the demand for round timber was quite tangible. Comparison with 2021 allows us to create some comparative basis for analyzing the current state of the industry after the imposition of Western sanctions.
According to current Rosstat data, by the end of 2024, the volume of timber logging has reached the level of 180 million cubic meters. Nevertheless, the Rosstat data cause some concern, because it is not clear who are the consumers of this raw material? This question arises because the markets of timber products show a decrease in the production and a slight increase in logging, compared to 2023, and it looks illogical. It can be assumed that some growth may be due to non-sectoral consumption, such as, for example, logging for laying gas infrastructure, road infrastructure, etc., however, there is no direct answer. According to some information, the growth of logging resulted from the introduction of a state electronic system of timber transaction support, which led to better accounting and some data coming out of the "shadow".
General status of the logging industry
The North-West Federal District of the Russian Federation was the most affected for 2021-2025. The problem of the North-West Federal District is related to the loss of the European market for timber products from Russia. For example, the Arkhangelsk Oblast unexpectedly turned out to be the most remote region from the current export markets in the conditions of the European market closure. Accordingly, all the economic problems of the timber industry complex are most acute there.
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There has been a reduction in logging in the Siberian and Far Eastern Federal Districts, which is also quite natural, as suppliers of sawn and timber products from Northwestern and Central Russia have increased supplies to the Chinese market, which has created additional competition for traditional Siberian exporters. In addition, some Siberian manufacturers supplied their products to the European market, which is currently closed since 2022.
An additional factor that aggravated the competition of Siberian companies for the Chinese market was the provision of transport subsidies to producers in the Northwest during 2022-2023 for the transportation of timber products to China. In turn, Siberian and Far Eastern producers did not receive such subsidies, which created conditions for unequal competition, although the cost of transportation from the Siberian region to China is also quite high.
The growth of logging is observed in the Central and Volga Federal Districts, which is associated with an increase in the production of wood boards. At the same time, in the overall logging by region, the volumes of these federal districts are small.
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Officially, the volume drop in the North-Western District is 2% compared to 2021, in the Siberian District - 2%, in the Far East – 1%.
A sharp drop in plywood production and sales leads to a drop in demand for birch veneer logs, which in turn leads to a decrease in the interest of loggers to enter the forest. Previously, suppliers could sell plywood at a good price, but now this price is quite low, and in some regions there are problems with sales. Add to this the drop in demand for timber in general, and the situation for loggers becomes extremely difficult.
In this regard, there are obvious problems with the profitability of logging itself, an additional negative factor affecting the demand for wood raw materials is the lack of government subsidies for the transportation of timber products in 2024.
Also in Russia, there is a process of redistribution of forest lease rights from one owner to another, to those who are most economically stable and can provide logging. Here we are talking, first of all, about Western companies leaving Russia, as well as domestic small businesses, which in the current situation are poorly adapted to further activities.
Price fluctuations for roundwood are within 5%, both in the softwood and hardwood markets during 2025. The absence of surges indicates that demand is in some balance. At the same time, the analyzed prices reflect supply and demand for large loggers. That is, they mainly reflect sales of roundwood within the holding companies. If we consider the supply on the open market, the price increase is significant, which is due to the reduction in the supply of roundwood due to the withdrawal of small loggers and the reduction of logging in general.
The open market has been gradually shrinking over the last years due to the reduction of the share of small business and enlargement of tenants, so this market is currently a secondary market.
Status of timber products consumption markets
According to NLARI estimates, sawn timber production in Russia is declining. If in 2021, Russia produced about 42 million cubic meters, at the moment, the country produces about 33 million cubic meters.
There has also been a decline in exports. In 2023, Russian manufacturers, against the background of state support in the form of transportation subsidies for manufacturers in the Northwest, tried to work more actively in the Chinese market, and, given the combination of factors, there was room for many companies in the Chinese market. However, the situation in the Chinese market is currently difficult, and there is no rush of offers from Russian companies.
When looking at price offers for sawn timber products, two factors need to be taken into account. Prices are not high, while there is high cost inflation, so the increase in product prices may not offset the increase in raw material and resource prices.
Previously, there was a conditional division of sales markets in Russia: large businesses worked for export, while small and medium-sized businesses worked for the domestic market. Now, however, large sawmills are entering the domestic market. Due to export restrictions, large businesses have entered retail chains and construction stores and are gradually squeezing out small and medium-sized producers.
Despite the fact that large businesses have entered the domestic market, there is a disparity in supply. The channels used by small businesses, such as small construction depots do not receive supplies from large sawmills. However, small businesses are also reducing their presence in this sales channel and in the market in general, as it is difficult to compete on price with chain stores, where large businesses are concentrated. As a result, there is a segmented shortage of sawn timber in certain regions, leading to high prices for sawn timber, as we saw in 2024.
This general imbalance in the market is leading to a decline in small businesses in the production of sawn timber, and it is not certain that they will be able to return later. The problem is not that there will be no demand for sawn timber products, but rather that small businesses will most likely be unable to resume logging activities.
The most successful segment of the timber industry is the production of chipboard and OSB. There has been steady growth in chipboard production. The situation with OSB production is complicated by the shutdowns of some of the largest manufacturers for various reasons.
At the same time, plywood manufacturers are trying to occupy the traditional niches of OSB manufacturers in the domestic construction market due to the inability of plywood manufacturers to export their products to their traditional markets in Europe and North America.
The competitive situation between OSB and plywood manufacturers may be resolved by the return of the largest OSB manufacturers to the market, which could, at first glance, cause market prices to collapse and hit plywood manufacturers the hardest once again.
The main driver for the growth of chipboard production remains furniture consumption. The reduction of preferential mortgage programs and the lack of significant growth in new housing construction will lead to a decline in active demand for furniture. The overall forecast for this segment is that the peak in production and demand will gradually fade away. Demand will remain strong for the next year or two as people continue to furnish their homes, but in the long term, there is no positive outlook without a change in the situation.
The situation on the fiberboard markets is quite complicated, which is not so much due to Western sanctions, as these products are mainly sold on the domestic market. The Russian domestic market is seeing a slight decline in production volumes to 651 million square meters in 2024 from 739 million square meters in 2021. The reasons for the decline are complex. For example, one reason is the emergence of quartz vinyl flooring on the market, which is squeezing out traditional laminate flooring.
This is a long-term problem that will affect MDF and HDF manufacturers. Competition is intensifying and is not in favor of laminate flooring manufacturers. As the market becomes saturated with SPC plastic flooring, prices for this product will fall, which will also have a negative impact on laminate sales. Therefore, despite the growth in new housing construction in recent years, the situation on the MDF market is the opposite. Competition on the market will be complicated by the commissioning of a new large plant with a full production cycle of auxiliary companies in the Kaluga region.
Plywood is the product that has suffered the most from Western sanctions, as it has always been oriented towards Western markets. Plywood production volumes have declined quite dramatically. Production growth of 200-300 thousand cubic meters in 2024 does not allow us to talk about the sector returning to its previous production volumes of 4.5 million cubic meters. This situation on the market may continue for a long time if no radical changes occur.
If we look at prices over time, periods of growth are followed by periods of decline in the chipboard and OSB markets, but on average, prices are pretty low. Plywood shows a wide range of prices, which means that many manufacturers are trying to adapt and find new niches with varying degrees of success.
The pulp and paper industry feels confident and calm. There are several reasons for this. First, the pulp and paper industry is 60-70% focused on the domestic market. Exports are primarily targeted at Central Asian markets, which do not have their own pulp and paper production facilities. Western Europe and the US are oversaturated with pulp and paper products of their own production, and access to these markets has always been limited for us. The dynamics of pulp and wood pulp production by year remain virtually unchanged.
This situation is synchronized with the situation on the paper and cardboard market. After the sanctions were imposed, there were some problems with office paper, but they have all been resolved. The market situation remains stable and confident. The same can be said about price parameters, which have remained stable over the years, indicating a balanced market.
Forecast for the development of the Russian timber industry for 2025
The development of all sectors of the timber industry depends on geopolitical changes due to its export orientation. If there are no changes, gradual growth from year to year can be observed in a number of segments, as the industry will restructure, find new niches and sales markets. Nevertheless, the main solvent sales market that shaped the industry was the European market. At this stage, it can be stated that the Russian timber industry has now reached a certain bottom, is slowly adapting, and will continue to exist in this paradigm.
The full restoration of preferential mortgages will also lead to an increase in demand for both sawn timber and chipboard, plywood, and MDF. As for logging, the forecast for 2025 may be zero growth or plus 5%, due to the adaptation of sawmills, the emergence of new niches, and trial deliveries of sawn timber to new export markets. Plywood production will remain relatively unchanged. We can predict a decline in chipboard production due to the peak in furniture consumption. A slight increase of 0-5% is predicted for fiberboard. Significant growth is impossible given the current low consumption. Growth of around 0-5% is also possible for pulp and paper.
If we look at the decline in markets from 2024 to 2021, the main decline occurred in the production of sawn timber, fiberboard, and plywood. However, from the perspective of timber raw materials, the main sectors affected were sawn timber and plywood producers, i.e., those sectors that consume high-quality raw materials. Softwood sawlogs and birch plywood logs are key forestry products that determine the profitability of logging. This is the answer to the question about the state of the logging industry.
To summarize the analytical review, we can say that we do not see any significant drivers in the industry, i.e., everything is still on a downward trend. The markets for forest products are quite limited, and those that have been developed are in a state of equilibrium. There are no new investments in the industry. Therefore, the current situation suggests that, having reached rock bottom, the industry will slowly recover throughout 2025, barring any significant geopolitical shifts.
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