Potential Impacts of Russia-Ukraine Conflict on Softwood Log and Lumber Markets

Sanctions on Russia, including the ban on using the SWIFT money transfer system, will severely limit its ability to participate in international trade, but the impacts to its softwood log and lumber trade are likely to be less affected than other industries. Over half of Russia’s softwood lumber trade and three-quarters of its softwood log trade is with China. China has not imposed sanctions on Russia and has payment systems independent from the SWIFT system, so disruptions to this trade flow are expected to be relatively limited. The largest impact will likely be the loss of Russia’s softwood lumber trade to the European Union. The conflict has also disrupted shipments of lumber from Ukraine and Belarus to China. With less lumber available in the global market, the current rally in prices is likely to be sustained.