Despite large timber resources, Russia struggles to attract investments within the forest industry because of political and financial uncertainty in the country. Domestic prices for softwood sawlogs and pulplogs were up in 2009, while hardwood log prices fell as a result of a sharp decline in log exports to Finland, reports the Wood Resource Quarterly.

For Immediate Release

SEATTLE/EWORLDWIRE/April 21, 2010 --- Domestic softwood sawlog prices have moved up in Russia in 2009 both in Ruble and in U.S. dollar terms, according to the Wood Resource Quarterly ('http://www.woodprices.com'). In the fourth quarter, average pine log prices were over 30 percent higher than in the first quarter of 2009 (in Ruble terms they were up 15 percent during the year), as reported in the Wood Resource Quarterly. The major reason for the price jump was that production of lumber and plywood picked up towards the end of last year, and demand for logs was slightly higher.

Softwood pulpwood cost also went up during 2009 in Rouble terms, but hardwood pulpwood prices fell. The hardwood log market changed dramatically during 2009 because of the sharp reduction in exports of birch logs to Finland. Export volumes were down by 8.5 million m3, or 72 percent, from 2008 mainly as a result of reduced demand for hardwood fiber in the Finnish pulp industry.

The Russian government's ambiguity and lack of clarity regarding the future policies of log export taxes has resulted in a reluctance from foreign companies to invest in Russia, and many forest companies are considering other regions for their long-term supply of wood raw-material.

Russia's Prime Minister Vladimir Putin announced last year that the current log export tax for softwood timber will remain at 25 percent of the log value (with a minimum of 15/m3) for 2010. He also hinted that this tax might be extended to 2011 if the demand for Russian forest products had not improved by that time. The key message in the Prime Minister's statement was that Russia has no intentions of suspending the export tax altogether as had been requested by the Finnish Government and by the European Union. There are, however, indications that the duty-exemption for birch logs night be raised from top-diameter 15 mm to 24 mm.

In addition to a decline in demand for Russian logs, the wood supply increased in the second half of 2009. Winter was very cold in western Russia this year, which was good for logging. More timber is expected to be available in the spring and with substantial log inventories, costs for both sawlogs and pulplogs can be expected to decline later in the spring.

Official statistics show that timber harvests were down 15 percent in 2009 as compared to the previous year. This seems low considering the substantial decline in log exports and the reduced domestic production of lumber, wood-based panels and pulp last year. WRI estimates that the actual decline in timber harvests last year was closer to 20 percent.

Global timber market reporting is included in the 50-page publication Wood Resource Quarterly. The report, established in 1988 and with readers in over 25 countries, tracks sawlog, pulpwood, lumber and pellet prices in key regions around the world and also includes regular updates of the latest developments in international timber, pulp, lumber and biomass markets.

Contact Information
Wood Resources International LLC
Hakan Ekstrom
Seattle, USA
'http://www.woodprices.com'

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CONTACT:
Hakan Ekstrom
Wood Resources International LLC
10654 NE 204th Pl
Bothell, WA 98011
PHONE. 425-402-8809

SOURCE: Wood Resources International LLC