The German Wood Industry Association (HDH) expects that the impact of the Russian-Ukrainian conflict on the German wood industry will be extended due to the EU's sanctions on Russian banks and the lack of capacity of Ukrainian truck drivers to undertake military tasks. Trade-in forest products between Belarus will come to an almost complete standstill.
At the same time, due to the shortage of raw material supply and loss of labor caused by the conflict between Russia and Ukraine, the import trade of wood products, furniture, and parts between Germany and Ukraine's neighboring countries such as Poland, Slovakia, Hungary, and Romania will also be affected. Producers in these countries are facing further supply chain problems as they cannot source logs from Russia, Belarus, and Ukraine, so they may increase purchases of German timber and semi-finished products. This will lead to a tight domestic supply of wood raw materials in Germany and will push up wood prices.
In 2021, Germany imported wood products, furniture, and furniture parts worth 625 million euros, 309 million euros, and 285 million euros from Russia, Belarus, and Ukraine respectively, accounting for 2.6%, 1.3%, and 2.6% of Germany's total wood and furniture imports, respectively. 1.2%. Imported commodities mainly include softwood lumber, hardwood veneer, veneer lumber, plywood, box pallets, bedroom furniture, etc. During the same period, Germany exported 176 million euros worth of wood products and furniture to the above three countries, of which Russia was the most important market, and only a very small amount was exported to Belarus and Ukraine. Kitchen furniture, furniture accessories, and MDF are the main export commodities.
According to industry estimates, the impact of the Russian-Ukrainian conflict on the German timber industry will be multifaceted. First, the raw material sources for the German wood industry will be greatly reduced. The German Wood-Based Panel Association said that although the German wood-based panel industry does not import raw materials from Russia or Belarus, countries such as Poland, as the main raw material suppliers for the German wood-based panel industry, mainly source wood from Russia and Ukraine. Today, purchases from these two countries are reduced or even stagnant, which will lead to a reduction in the amount of wood-based panel processing raw materials that Germany can purchase. In addition, all wood from Russia and Belarus is currently identified by PEFC and FSC as so-called conflict wood, resulting in an already tight supply of certified products and increasing competition for certified wood.
Secondly, since the wood-based panel industry is an energy-intensive industry, with the outbreak of military conflicts, the price of energy and urea used for rubber production has risen, and the German wood-based panel industry has been greatly affected. Peter Adrian, chairman of the German Chamber of Commerce and Industry (DIHK), expects that the Russian-Ukrainian conflict will have a serious impact on German-Russian trade relations and energy supplies. Germany relies heavily on Russia for imports of natural gas, oil, and coal. These three categories of products supplied by Russia account for 55%, 35%, and 50% of its imports, respectively. Austria is also facing the same problem, for which the Austrian Forest Association, the Biomass Association, and the Austrian association propellers recently called on the federal government to adopt a 10-point plan to fully exploit the potential of wood energy as soon as possible. As the residue from Austrian forest management is currently more than 250 million cubic meters, it can fully meet the energy needs for heating.
Once again, the German wood processing machinery and equipment industry will lose an important market. Due to the Russian-Ukrainian conflict, Deutsche Messe's exhibition hall for wood processing machinery and equipment set up in Hannover has been crowded with Ukrainian refugees. Russia will try to use its ties with China to obtain goods prohibited from sale in the United States and Europe, especially technology and equipment related to industrial and mechanical engineering. In this regard, the president of DIHK expects that the conflict between Russia and Ukraine will have an impact on Sino-German trade relations.
Finally, the German furniture industry will lose an important export market. Russia used to be an important export market for German furniture. Before the outbreak of the Russian-Ukrainian conflict in 2014, Germany's furniture exports to Russia exceeded 200 million euros. By 2021, German furniture exports to Russia will only be worth 87.5 million euros. The German Furniture Industry Association expects that furniture exports to Russia will also fall sharply.