The global lumber industry has experienced turbulent times over the past year or so due to lumber shortages, which in turn has caused lumber prices to skyrocket. Russia’s war with Ukraine now poses a new challenge to the industry, as the world economy may have to be without Russia, a major exporter of wood products. Source: Badunews
In March, Russia stopped exporting three types of wood – wood chips, logs and veneer – to Japan after it was added to Moscow’s list of “unfriendly” countries. The Japanese government responded by imposing additional sanctions on 19 April, including a ban on imports of these wood products.
With geopolitical tensions showing no sign of abating, timber industry players say trade bans have cast as hadow over their business, lumber prices are likely to remain high, and some companies are forced to find alternatives to Russian lumber.
Soya Higashino, who heads Higashino Timber Co, an Osaka-based company that provides construction services and timber products, said he shuddered when he first heard about the trade ban.
“While (the industry) has been facing timber shortages due to ‘timber shock’ since 2021, we are now facing an additional problem,” Higashino said.
Lumber prices started rising early last year when housing demand in the US and China, which were steadily recovering from the pandemic, began to swell, causing shortages.
The wholesale price of some imported lumber more than doubled by the end of last year, according to data released by the Bank of Japan.
“The trade ban comes at a time when we are already struggling with sourcing. So, I wouldn’t be surprised if timber prices spike temporarily, as many companies may rush to get Russian timber (stocks) when they still have access to it,” Higashino said.
The trade ban excludes items such as laminated lumber, plywood and rafters.
In addition to the already high lumber prices, the recent depreciation of the yen has further pushed up import costs. The yen has fallen more than 10% against the dollar this year.
“Prices of imported timber are likely to rise further. They are likely unlikely to drop to (pre-pandemic levels),” said Kiyotaka Okada, executive director of the Japan Timber Importers Association.
According to the statistics of the Ministry of Agriculture, Forestry and Fisheries, the total import of wood last year was about 1.2 trillion yen, of which Russian wood accounted for 63.4 billion yen, accounting for about 5%.
While trade data suggest that the value of imported Russian timber may not be high, this masks the level of concern within the industry.
Russian wood is commonly used in house construction, so many carpenters and builders are accustomed to using it.
For example, Russian wood veneer made of larch is popular for use as a covering for the outer layers of plywood, which is often used as part of a house’s structure. Russia accounts for about 80% of Japan’s veneer imports.
According to data from the Ministry of Forestry, imported veneer will only account for 3% of the wood materials used to make plywood in 2020, but it may still cause problems for some enterprises.
“Wooden veneer is the most affected. … Domestic plywood manufacturers have had some problems,” Okada said.
“(Producers)still have inventories so there won’t be much change in the near term, but if sanctions are extended, they fear the impact will be significant.”
Homebuilders who rely on Russian timber products will have to find alternatives and may have to delay construction, Higashino said.
In addition, industry sources say more companies may stop using Russian wood to avoid damaging their reputations. In this case, these companies wil lalso eventually have to find alternatives.
Higashino added that the immediate impact on his company’s sales and profits would be minimal, as Russian wood only accounts for about 7% of the wood products Higashino handles. The main Russian item used by Tono is square wood, which is not included in the list of prohibited items.
However, as sanctions are disrupting supply chains and logistics, it is uncertain whether the goods will be able to make their way to Japan.
“(The trade ban) is unlikely to have any positive impact,” Higashino said.