Just 3% of Russian timber is traded into India – but that could soon change with the country’s largest exporter (responsible for more than 30% of its trades) eying massive growth with the tiger economy.
As it stands, Russian exporters sell 90% of their lumber to China – with its almost total reliance on Chinese traders coming as a result of Western sanctions, crippling its US $3 billion trade with the European Unions. Now, Segezha Group – last month forced to raise funds on the Moscow Stock Exchange due to European sanctions – wants to increase trade by more than 50% (over 2022 levels) with one of the few major economies that do not have sanctions against Russian forest products.
That is, according to Nikolai Ivanov, Segezha Group’s Vice President for External Relations, who said the Russian giant wants to grow the market for wooden house kits, biofuel, and wood pellets in addition to its mature plywood trade. Speaking to the Eastern Economic Forum – a geopolitical forum funded by Putin and aiming to boost Far East Russian trade, Mr Ivanov described the pivot as “the start of a long-term strategy, though he acknowledged that these are still small volumes compared to the market’s full potential.”
However, in order to achieve this, Russia and India – long-time allies from the Cold War, must work to reduce import tariffs (30% on all Russian plywood) and duties (10% on paper): “High logistics are another hurdle,” Mr Ivanov said, “for Segezha Group, keeping transportation below 15-20% is crucial for profitability…a US $1,800 per 40-foot container is an acceptable rate.”
According to Mr Ivanov, reduced tariffs, duties, and crunched logistic costs could open up an enormous market for Russia – potentially exporting up to 50 million cubic metres of timber into India every year: “This would represent 25% of Russia’s entire timber harvest, all the while helping India meet its surging demand for plywood, lumber and logs.”
The new pivot comes as India’s Ministry for Commerce and Industry reports that Russian lumber exports to India have surged quadrupled for the first half of 2024 – or 22,000 cubic metres. However, this represents just 2.2% of India’s total lumber imports, with Russian trade dwarfed by Brazil, Germany and the US – which has tripled over the period.
At the same time that lumber has increased, Russian trade in plywood also grew by 17% – to 8,000 cubic metres for the six months. However, like lumber, the Russian plywood trade into India remains tiny, representing just 1% of India’s total plywood imports over the same period.
Exporters are looking at India as a pivot from a soft China.
Russia is not alone in eyeing India as a hedge against an increasingly soft Chinese market. In February, Wood Central reported that India has emerged as one of the United States’ most important export markets, with 116,000 cubic metres of softwood lumber shipped from the West Coast to India last year alone.
Last year, Wood Central reported that Indian demand for Roundwood will grow 70%, from 57 million cubic metres in 2020 to 98 million cubic metres in 2030, driven by a surge in construction activity. According to the Indian Centre for Science and Environment, the country’s 2022 demand for timber was 63 million cubic metres—30 million cubic metres for domestic production and 33 million cubic metres from imports – with Russia among a growing number of exporters competing for this business.
- To find out how India is now searching the seven seas to meet its demand for timber, click here for Wood Central’s special feature.
