Russian domestic log prices dropped sharply in the first quarter of 2008, according to a report from Wood Resource Quarterly.
Pine sawlog prices were 22% down in the last quarter of 2007, softwood pulpwood 20% and hardwood pulpwood around 15%.
The fall is attributed mainly to improved supply thanks to better logging conditions, plus a decline in overseas log sales due to the increase in Russian export duty
The export tax rate has risen from 6.5% of log value two years ago to 25% and is set to increaase to 80%. The aim is to restrict exports and boost the domestic processing sector.
Exports to Finland have already been heavily impacted, falling 37% last year. Sales to Europe overall were down to 6 million m³ from 10 million m³ in 2005.
Mills in Japan and, particularly, China are also expected to be hit hard by the new duty rates. China’s imports of Russian logs had risen from 530,000m³ in 1997 to 23 million m³ last year.
If Russia does impose the 80% duty rate, Wood Resource Quarterly predicts that its softwood log exports will dry up, with the last shipments leaving the country in December this year.
