Russia-China Timber Trade_cover.jpg

Figure 3. Species composition of China’s imports of Russian roundwood, 2004, by percentage.manufacturers are therefore familiar with these species and aware of their wood properties, processing technologies,and utilization. The same may be said of Russian hardwoods (e.g. oak, ash, birch, and linden). Thesespecies are used in the production of high-quality furniture, parquet and flooring, veneer, and moulding. Theprice of Russian timber is comparatively low, partially because the timber is transported over relatively shortdistances when compared to distances between China and other major timber producers. In 2004, the meanCIF (Cost, Insurance, and Freight) of Korean pine and Scotch pine was only US$73.33 per cu. m, while theprice of New Zealand Radiata pine was US$92.62 per cu. m and its quality was lower. The prices for Russianhardwood are also far lower than for North American hardwood and European beech.Finally, this rapid growth in Russian timber exports to China coincided with a decline in timber prices on theChinese market, which were much steeper than declines in other Northeast Asian markets (See figure 4). Twomajor reasons account for this trend. The first is a classic economic scenario whereby supply outstrips demand,fueled by the explosion in the number of Russian exporters. Most of these small exporters have no significantproduction and export infrastructure. Instead, they act as intermediaries, relying on large Chinese trading companiesto back them. Small exporters and private companies are interested in quick profits, and are generallynot concerned with environmental and social issues. The surge in supply from predominantly unprofessionalRussian exporters, and the business skills of the relatively experienced Chinese importers, has combined todrive down the prices for Russian timber since 1999. The second is the coordinated price policy of majorChinese importers and the aggressive business tactics of Chinese traders in Russia.Lately, prices for roundwood have increased somewhat, which can be explained by the unabated increase indemand for high-quality large-diameter roundwood on the Chinese market. In 2002, the price for one cu. m ofroundwood imported by China was US$53.3, whereas in 2004 it was US$59.9. However, Russian exporters tosome extent influenced these prices.Figure 4. Price trends for Russian timber in selected Northeast Asian countries ($/cu. m).9