Start of installation of the log sorting line.
May, 5-6 2016
WOOD MARKETS' 6th Global Softwood Log & Lumber Conference
Fairmont Hotel Vancouver, Vancouver, BC Canada
Participant - Mr.Martin Hermansson
Get full information about this event on website:
Annually the Swedish forest industry association arranges a conference in Karlstad, Sweden. This event is called Trämarknaden and it is a discussion forum where economic and markets development is the main focus. http://www.skogsindustrierna.org
Representing Russia with one of the main speeches as well as participation in the panel discussion, the CEO of the Novoeniseysky sawmill, Mr. Martin Hermansson, held a presentation and introduced the main expectation from a Russian industry perspective. The main findings presented to the European audience was the following:
- Looking at the top four Russian forestry regions, more than 80% of the sawmills have been fully modernized with new European equipment since the last market peak 2007.
- Due to hard market, high transport costs and a strong ruble there was a stable lack of working capital during the last four years. However, by now most mills have decent margins even if most mills still sit heavily in bank debt in comparison to their Scandinavian peers.
- In the opinion of Mr. Hermansson, a lower demand of coal and iron ore in terms of Russian exports to China has freed up rail wagon capacity on the Russian railway.
- Russian producers have been more heavily hurt by the unstable Egyptian market during Q2-Q3 2015 mainly as the share of Pine sawn wood in Russia is higher than from most German, Austrian and Scandinavian mills. The current situation is expected to change no earlier than Q2 2016 until when it is expected that North African deliveries will be further reduced and replaced by China.
- The expected increase in total sawn wood exports to the main markets from China is approximately 1,0-1,2 mln m³ for 2016 following a utilization increase in existing Russian mills. Few new sawmills will be launched during 2016 so the main part of the increase is related to existing mills increasing production supported by lower log costs in dollars terms due to the devaluation (forest lease fees and salaries are ruble denominated).
- Russia’s market share in China will hence continue to increase during 2016 and especially so in relation to Scandinavian mills. The freight costs from Scandinavia to North Africa are lower than from Russia, which means that Scandinavian mills have an advantage to Europe and MENA in comparison to Russia.