Russia’s Forestry Industry Remains Under Pressure as Losses Deepen

Russia’s forestry sector is continuing to deteriorate, according to a study by the Institute of Economics and Industrial Engineering at the Siberian Branch of the Russian Academy of Sciences, which found the industry is approaching a systemic crisis amid sanctions, weak demand, and high borrowing costs.

The study said the sector swung from a combined net profit of 24.3 billion rubles (US$315.6 million) in 2021 to a net loss of 11.1 billion rubles (US$144.2 million) in 2024, while corporate debt increased 1.6-fold over the same period. About half of all forestry companies posted losses last year as revenues declined, reserves were depleted, and elevated interest rates effectively shut off access to new financing. Smaller producers were found to be under the greatest pressure, with limited financial reserves and rising costs as orders continued to weaken.

The industry’s financial strain has been compounded by weakening export markets. Sawn timber shipments to China fell 30.0% year-over-year to 2.6 million m3 during the first four months of 2026. Exports to Japan declined 19.0%, while shipments to South Korea dropped 18.0%. Overall, Russia’s sawn timber exports fell 32.0% to about 4 million m3 during the period, despite China accounting for roughly half of all Russian shipments in 2025.

The slowdown in China has been driven by the country’s prolonged property downturn. Home sales by value fell 9.5% in 2025 to their lowest level since 2009, while floor space sold declined another 11.0% during the first five months of 2026, according to China’s National Bureau of Statistics, reducing demand from the construction sector that has traditionally supported Russian lumber exports.

The study also noted that a stronger ruble has eroded the competitiveness of Russian timber in Asian markets as demand softens. Consultancy Strategy Partners expects Russian timber exports to decline another 7.0%–10.0% during 2026, citing weaker construction activity, higher freight costs, and the stronger currency as continuing headwinds.