The Russian pulp and paper industry is facing an acute crisis in product sales.
High export logistics costs have exacerbated sanctions and a severe lack of demand in the Chinese market, forcing mills to cut production volumes.
Also, the market has already been taken over by pulp and paper producers from India, Brazil and Argentina, where they have launched large-scale capacities in fast-growing raw materials such as eucalyptus and bamboo.
In the first half of 2023, the production of Russian wood pulp decreased by 3.5% to 4.2 million tonnes, according to Rosstat, the Federal State Statistics Service.
Paper and cardboard production declined by 4.6% to 4.8 million tonnes.
Since the beginning of the year, the price of Russian BHKP in China has fallen by 43%, reaching $449 a tonne, the lowest since February 2021.
To counter this downturn, some mills have attempted to boost domestic sales by lowering pulp prices and shifting to manufacturing pulp in corrugated cardboard production instead of recycled paper.
This unsuccessful strategy has led to losses of about $US 1.1 million for each of the three primary producers.
Starting from the second quarter, the leading businesses with pulp and paper mills in their structure have returned to traditional production schemes using recycled paper.
However, the domestic market’s historically low demand persists, creating a substantial surplus of pulp and paper products in Russia.
One of the prominent producers, Segezha Group, has already redirected some of its export volumes of kraft paper to the domestic market to cater to local needs.