Exports of Russian biofuels have collapsed, with Russia’s largest forest company, Segezha Group, reporting that sales in wood pellets are down more than 87% since the start of the Ukraine War.
Once the world’s second-largest producer of pulp and paper, Segezha is now heavily relying on the Russian market, which makes up 50% of its total biofuel production, to offset losses from Western sanctions – with total sales in wood pallets dropping from a peak of 259,000 tons in 2022, to 151,000 tons in 2023, and to just 34,000 tons last year.
It comes months after Segezha was forced to raise funds on the Moscow Stock Exchange, causing its share prices to plunge more than 20% in a single day. “The Segezha financial difficulties are largely driven by ongoing sanctions,” according to Russian news wire services: “It has struggled since losing access to its European market due to the embargo on Russian products, including plywood, lumber, and pellets.”
Last week, Wood Central reported that Russian timber has lost more than one-third of its export markets, with war sanctions and interest rates crippling one of Vladimir Putin’s most important sources of funding. According to the Russian-backed Lesprom Network, Russia exported more than 930,000 tons of wooden pallets in 2023 – a drop of 46% from 2022 and a 60% decrease on the pre-sanction peaks of 2021, when its exports reached a historical peak of 2,440 thousand tons.
- To learn more about the impact of sanctions on Russia’s timber and paper supply chains, click here for Wood Central’s coverage from August 2024.
