b'SEPTEMBER 26 - OCTOBER 23, 2022FOREST PRODUCTS 23(CONFLICTEDcontinued fromaround 8.5 million cu/m of softwoodHeated demand for wood pellets rising page 22) from Belarus, Russia, and Ukraine in So, why is a major forest exporter2021, roughly 10% of total demand,Th global demand for wood pellets is rising following likeRussiaimportingcloseto$700accordingtoWRIfigures.So,theRussian sanctions. millionworthofforestproductsinquestion becomes how will European thefirstplace?Simplyput,RussialumbermanufacturersreplacetheThe Russian invasion of UkraineBut wood pellets are also becom-doesntmanufactureagreatdealof8.5 million cu/m of wood? Certainly,and subsequent sanctions by Westerning a major export item and Russia is forest product for export. On the othersomeofthedeficitwillbesourcedpowershassetoffachainreactiona major player. Russia is estimated to hand,countrieslikeChina,FinlandtoScandinavia,whichalreadyhasin the global marketplace for lumberhave exported over 2 million tons of and Germany do manufacture a pleth- anexistingsupplychaintoEurope.andwoodproducts.Andimpactswoods pellets in 2020, with a major-oraofforestproductsrangingfromBut will this bump out Scandinavianreach down into wood pellet markets.ityofthattotalbeingconsumed paper and pulp to furniture, plywood,exports to other markets like the U.S?Wood pellets are made from the wasteinEurope.Russiaisthe2 nd largest and flooring which are exported glob- NorthAmericanexportsmightalsostreams generated by the manufactur- wood pellet exporter behind only the ally and even to Russia.contribute to Europe but again whaters of primary and secondary productsU.S. and finding replacement tons is Whichwaspartofthemotiva- other markets will be bumped in thelikedimensionallumber,hardwoodgoingtobeachallenge. TimPortz, tionbehindthe AssociationofFur- process and at what cost? flooring,woodpalletsandcabine- Executive Director of the Pellet Fuels niture and Woodworking EnterprisesFor example, Vietnam is rapidlytry. In some cases, the pellet makingInstitute(PFI),atradeassociation of Russia request to the Russian gov- developingarobustwoodproductsfacilitiesarelocatedadjacenttotherepresentingmanufacturersofwood ernment to establish tariffs up to 60%sector, will it become a bigger playeractual sawmills or wood manufactur- pellets in the U.S, in a Business Wire on imported furniture and other woodwith Russia on the sidelines?ing facilities to take advantage of thereport, notes, The demand to fill these products from unfriendly countriesPerhapsofbiggerconcernissymbioticeconomicrelationship.Inmissing tons from Russia is being felt whilesubjectingpro-Russiancoun- China. With so much of the importedthe U.S. it is estimated that wood pel- throughout the world, including here tries to a 10% duty. In a recent story,wood being used in the manufacturinglets are used as primary or secondaryin the United States. FurnitureTodayattributedRussia- of export products such as furniture,space heat in over 1 million homes,It is a demand surge that has been basedwoodanalystLespromasthe(CONFLICTEDcontinued oncreating annual demand for nearly 2anticipated by the PFI. In late August, POPGlobalAd2021 copy.pdf 1 8/29/22 7:49 PMsourceofthemarketinformation.page 24) million tons of wood pellets. (DEMANDcontinued on page 24)Lesprom said this move would enable Russianmanufacturerstocompete withforeignmanufacturersinthe domesticmarketearninganaddi- The Port of tional $813 million in revenue on a 10%-12% growth in revenue. Of course, the irony is that ChinaPascagoulais among the pro-Russian importers. And while European nations like Ger-many,FinlandandPolandhavehad somemarketpenetrationintoRussia beforetheadventofhostilities,Bei-jingsgeo-politicalpositionvis-a-vis theUkraine War,asMoscowsmost necessaryfriend,opensthedoorfor apotentialincreaseinimports,such asmanufacturedwoodproductsand items like furniture from the factory-nation. The drop in housing construc-tioninChinaandaslowingGDP reducingdomesticdemand,histori-cally has triggered an increase in Chi-nese exports to bolster the economy.Mexico CaribbeanHowever,givenChinasproblems with the US (and the West in general), resourceladenbutmonetarilychal- Central Americalenged,Russiabecomesaneasier, albeit much smaller, export alternative. CC onfLiCtedt iMber M Forest ProductsShortly after the invasion Western paperproducersandwoodY Wood Pelletsmanufac-CMturerslargelyhaltedoperationswith Russia. This step came with the drop- MetalsMYping of certification by the FSC and CYPEFC,onMarch2ndwhichlabeledSteel South AmericaCMYRussian and Belarus (a major proces-sorofRussianlumber)asconflictBulk CargoKtimber. The labeling is critical to the sale of lumber and lumber products toProject Cargooverseas markets. The removal means that the timber cannot be used in man-ufacturing of certified products such as lumber, plywood, pulp, and paper for sale in the global marketplace. Underthede-certificationrules lumberthatwasheadedfromforest tosawmillandforwhichcertifica-tion had already been applied could be placed on the market while lumber in storage even outside the two coun-tries [Belarus and Russia] for which nocertificationhadbeenappliedis considered conflict lumber.Thishasanenormousimpact onhowtheglobalwoodandwood productmarketswillfunctiongoingMain Office - 228-762-4041forwardor at least until Russia is welcomed back into the global tradingMiami Office - 305-254-3117community.TheremovalofRussia and Belarus from global markets will clearly have a domino effect on wood product sourcing. PortofPascagoula.comForexample,Europeimported'