June 5, 2023

Hardwood Paroxysm

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Italy and the United States bought timber from Russia for more than 1 billion euros, despite the sanctions

Italy and the G7 countries continued to trade wood with Russia during 2022, despite the explicit ban imposed by the European Union on importing this type of product from the country led by Vladimir Putin after its invasion of Ukraine. According to the explanation provided by the Agency for the Promotion Abroad and Internationalization of Italian Companies (ICE) on Istat data, last year Italy imported wood and wood products from Russia worth 53 million euros. The figure is down by 72 million, compared to 2021 when imports amounted to 125 million euros. The same dynamic also for Belarus. In 2022, imports of Timber & Co amounted to 6.534 million, down 12 compared to 2021. On the export front, the situation has not changed, given that Italy continued throughout the past year, albeit in smaller quantities, to export wood-related products to Russia and Belarus. In fact, ICE figures show that total exports amounted to 19.974 million euros to the country led by Vladimir Putin (-5.375 million compared to 2021), while in Belarus we moved from 1.113 to 1.123 million euros in 2022. To this data is added the role of the United States of America, which witnessed An increase in the proportion of imports by 66% in 2022, by Italy. Small problem, a billion worth of Russian timber has been sold to the United States since the start of the war. Much of this plywood has been offered for sale by Menards, a Wisconsin company, ItaliaOggi points out, based on a filing posted by Earthsight, a London-based environmental association. According to the report, more than 260,000 cubic meters of Russian-Baltic birch would have arrived at US ports, with an estimated retail value of about €1 billion: “There is a great demand for expensive solid wood panels in construction and furniture production,” the report notes.

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Using customs records, Earthsight said G7 countries have imported more than $2.9 billion in timber and timber products from Russia and Belarus since the start of the conflict. Since then, the European Union, the G7’s largest market for such products, and the United Kingdom have imposed sanctions banning most such imports, but have failed to get to zero. However, the trade is still legal in America, Canada and Japan. Indeed, the largest remaining flows of so-called “conflict timber” are Russian shipments of lumber to Japan and plywood to America. The report indicated that the European Union’s imports of wooden furniture from Belarus were also notable.

Effectively (and effectively) preventing the import of timber from Russia is of great importance given that forestry is one of Russia’s most important pre-war industries after oil and gas. The country remains one of the world’s leading exporters of timber, due to the very large forests of conifers and birch trees. Obviously, all this has a strong impact on the country’s economy.

On the Italian side, some clarifications need to be made. The first is that Russia, Belarus and the USA are not among the top ten countries that we export and import with. So, on the one hand, if it is true that trade relations continued, albeit to a lesser extent than in the pre-war period throughout 2022, then on the other hand the impact of these products on the wood industry was minimal. According to FederlegnoArredo data, in 2022 Austria was the first country from which we imported wood with a value of €1.3 billion, out of a total of €5.7 billion in imports. Flow, which also recorded a growth of 47.7% compared to 2021. In second place is Germany with 574 million (+47.2%) and in third place is Poland with 328 million and a growth of 45%. The United States, despite Russia’s constant import of wood, ranks 14th as our timber supplier. According to ICE data, Russia will instead rank 22nd in 2022. Another interesting figure is the role of China. From this country, which, we recall, has not officially condemned the aggression in Ukraine and continues to establish economic relations with Russia, we have increased imports by 41.5% (232.5 million euros) in 2022.

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In terms of export, ICE data shows that the main flow is directed towards Germany (414 million), France (411 million), the United States (208 million) and Switzerland (158 million), followed by the United Kingdom, Austria, Spain and the Netherlands. China ranks 9th in terms of total commodities (Wood & Co) with a value of 68 million in 2022, while Russia slid from 17th to 25th in 2022 as the country to which we export goods related to the wood industry.

Numbers that, even if reduced, pose a moral problem, given Italy’s continued commitment to wanting to support Ukraine in the war against Russia.