According to a forecast by consulting firm Strategy Partners published in Russia’s business daily Vedomosti, Russia’s softwood sawn timber output is set to post a year-on-year decline for the second consecutive year in 2026, with an estimated contraction ranging from 2% to 4%. Official figures show that the country’s full-year sawn timber production dropped 2.5% year on year to 28.5 million cubic metres in 2025, and the decline widened to 4% in the first four months of 2026.

Official statistics have further validated this downward trend. Russia’s Ministry of Economic Development has listed the wood processing industry among the country’s weakest-performing industrial sectors. The sector’s output fell 4.3% year on year in the third quarter of 2025, with the decline deepening to 7.8% in October. Mikhail Yurin, Deputy Minister of Industry and Trade, stated during a Federation Council session that the industry has entered a downward cycle, warning that output could plummet by 20% to 30% in 2026 under an extreme scenario.

Valentin Gavrilov, Director at Strategy Partners, noted that exchange rates stand as the single biggest factor impacting industrial profitability. Leading manufacturers focusing on planed sawn timber for the Japanese market and capable of utilising low-grade raw materials maintain a sales profit margin of 5% to 7%. Mid-tier mills are barely breaking even, while smaller downstream players have slipped into operational losses. Gavrilov added that should the Russian ruble fall past 90 against the US dollar, the industry’s overall profit margin and EBITDA margin are expected to rebound to between 10% and 15%.

Logistical bottlenecks have compounded supply-side pressures. Congestion on the West Siberian railway network, overloaded transport corridors in eastern Russia and low wagon turnover efficiency have severely restricted lumber shipments to Asian markets. Some suppliers have diverted cargo to Uzbekistan, where market prices are 15% to 25% lower than those in mainstream export destinations.

China remains Russia’s top export market for softwood sawn timber, yet shipments to China tumbled 26% year on year to approximately 2.6 million cubic metres in the first quarter. Meanwhile, suppliers from Canada and Belarus are rapidly capturing market share, dealing another heavy blow to Russia’s timber exports.

Nikolai Ivanov, Vice President of Segezha Group, pointed out in an interview with Vedomosti that the global sawn timber market is mired in a structural crisis. Russia’s current year-on-year output decline has reached 10% to 15%, and a further contraction of 5% to 7% is anticipated by December. He stressed that the downturn is far more than a passive response to regional or global market cyclical fluctuations. Ivanov issued another warning that small and medium-sized sawmills in Russia’s Northwestern Federal District and Siberia face the risk of mass closures — a key reason behind the three-year bankruptcy protection order previously introduced in the Arkhangelsk region.

To navigate the crisis, Ivanov proposed an industrial transformation strategy shifting focus beyond primary sawn timber processing to high-value-added segments, including prefabricated housing kits, cross-laminated timber (CLT), biomass fuel pellets, forest chemical products and textile fibres. He urged the Moscow authorities to roll out long-term low-interest credit policies to support this strategic transition. He also disclosed that the group has signed major residential construction and advanced wood processing projects in special economic zones of friendly nations.

Source: Mucai Home