Russia’s furniture, plywood and wood panel makers have asked the Kremlin to rein in urea prices, after the resin feedstock more than doubled between March and May, pushing chemical inputs to as much as 40 per cent of the cost of a particleboard. That is according to the Russian-based publication RBC, which reports that producers want a transparent pricing mechanism to match the regulated prices farmers already pay for fertiliser.
Producers blame logistics restrictions through the Strait of Hormuz, with Iran, Oman, Saudi Arabia and Qatar accounting for around 35 per cent of the world’s urea exports. Urea alone can account for a quarter of a board’s production costs, according to market participants cited in the report.
Hard numbers on the squeeze come from the Association of Furniture and Woodworking Industry of Russia (AMDPR), which estimates that chemicals account for 30 to 35 per cent of the cost of particleboard and MDF, a larger share than the wood itself. “In January it cost 27,000 roubles a tonne, by May more than 53,000,” AMDPR director general Timur Irtuganov told Industriya Mebeli.
Making urea costs less than 10,000 roubles a tonne on the association’s estimates, under a fifth of May’s market price, and that figure barely moved through the surge. Russia is among the world’s largest urea exporters, leaving domestic mills paying export parity for a chemical produced in abundance at home.
Strikes on Iran closed the Strait of Hormuz in late February, stranding roughly a third of the world’s exported urea inside the Gulf. Global prices topped US$850 a tonne in April, up 80 per cent in two months and the highest since April 2022, according to the World Bank.
“30% of global urea trade comes out of Iran and the Hormuz-constrained countries,” CRU’s Chris Lawson told CNBC at the height of the crisis. The monitoring group AMIS, backed by the UN, estimated that 2.6 million tonnes of Near East exports were suspended in the first two months alone, with producers using vessels as floating storage.
Urea is the feedstock for urea-formaldehyde resin, the workhorse binder behind most of the world’s particleboard, MDF, and interior plywood. Price trackers still flag Hormuz as the main upside risk for resin costs this year, a squeeze shared by mills from Turkey to Vietnam, including the supply chains still moving Russian birch into Western markets.
The appeal comes as Russian mills fight a downturn on every other front, with furniture sales down 10 per cent in the first quarter and the country’s largest forest company posting a US$1.1 billion annual loss in April. AMDPR president Alexander Shestakov still expects furniture prices to rise just 5 to 7 per cent this year, provided the macro picture holds.
Producers have run this play before, petitioning Russia’s antimonopoly service in 2022 after urea nearly quadrupled to US$836 a tonne and domestic particleboard prices jumped 42 per cent in nine months. The association wrote then that it wanted “to avoid the emergence of monopolies and rising prices for wood panels,” in a letter signed by Mr Shestakov.
The demand has landed just as the market breaks, with shipping resuming through Hormuz in June under a US-Iran security arrangement. Urea at Russian export ports fell an average of 32 per cent in the month to July 1, to US$373 a tonne for granular product, according to Moscow’s Centre for Price Indices.
Analysts at the centre now describe a market of excess supply and off-season lull, leaving mills to learn whether domestic urea falls as fast as it rose. Their appeal to Moscow, made as prices crested, suggests the industry is not counting on it.
