world news - 05.05.2008
Russian export tax opens log markets for local
A Russian log export tax is helping blunt the impact of the U.S.
lumber market collapse for coastal forest company TimberWest Forest. TimberWest
is the province's No. 1 log exporter. But with U.S. demand and prices
in the tank, the company is letting its trees continue to grow rather
than harvest them, triggering a rare quarterly loss of $23.3 million
for the company. In a bid to slow down shipments of raw logs, the Russian government
imposed a 25 per cent export tax April 1, part of a commitment to
gradually raise taxes from 6.5 per cent in 2006 to 80 per cent by 2009. McElligott
said the April 1 increase is being viewed as proof that the Russians
are going to follow through with the 80 per cent tax next year, opening
new demand for B.C. logs. The log tax is aimed at encouraging more
domestic lumber manufacturing in Russia. "TimberWest has received
numerous inquiries for fir logs manufactured to Japanese peeler lengths
from Japanese plywood manufacturers in response to the anticipated
increase in the Russian log export tax," McElligott said in a
conference call with analysts. "If the Russians follow through with
this 2009 export tax increase, the peeler business in Japan should
develop more rapidly for TimberWest." He said specifically there is a new opportunity for B.C. fir peelers to replace Russian larch peelers in Japan. Peelers,
so named because they are processed by being peeled into wide veneer
strips used for plywood, are among the most valuable of logs. The best
are knot-free. Fir peelers sell on the Vancouver log market for
between $120 and $150 a cubic metre, compared to $60 to $70 a cubic
metre for a standard second-growth fir log. The impact of the
Russian tax is a further example of how the log and lumber industry has
become a global marketplace, said Peter Butzelaar, of International
Wood Markets Group consulting firm. Russia is the world's largest
exporter of logs. Butzelaar said the tax is going to hit Asian
and European countries that have come to rely on Russian wood. By 2009,
the minimum export tax in Russia is expected to be 50 Euros. "If a 15 Euro tax doesn't break, 50 Euros certainly will," he said. Chinese
sawmills are already finding it difficult to source Russian logs, he
said, opening up another potential market for B.C. logs. Log
exports have long been a controversial aspect of the B.C. forest
industry, with supporters saying they are a necessary source of revenue
if the industry is to remain diversified and healthy. Detractors say
exporting logs is the equivalent of exporting manufacturing jobs. Exports
have dropped considerably with the collapse of the U.S. housing market,
the most logical market for exporters because of its proximity. Logs
can simply be barged to mills in Everett, Tacoma or farther down the
coast. TimberWest is turning more and more to costly container shipping
for its logs destined for Japan and Korea, McElligott said, adding to
the cost. TimberWest, the province's largest landowner, is
permitted to export logs surplus to domestic demand under federal
regulations. Logs from Crown land are governed by stricter provincial
legislation. Victoria recently backed away from a plan to raise the
export tax on Crown logs to match the 15 per cent softwood tax on
lumber shipments to the U.S. Forests Minister Rich Coleman said the tax
hike was postponed while the government conducts another review of
forest policies.
See also:
- — Brazilian pine sawlog prices were up despite lower demand in the 4Q
- — Tools, techniques to estimate timber volume
- — Solidwood flooring shows strong growth in Guangdong Province
- — Finnish Forest Management Associations encourage an increased rate of forest thinning
- — Swedish officials protest against Russian timber protectionism
