Lumber production in Russia may fall by 2-4% in 2026

Lumber production in Russia may fall by 2-4% in 2026

    Experts from the consulting company Strategy Partners (part of the Sber ecosystem) predicted a decline in softwood lumber production in Russia by the end of 2026. According to their estimates, output may decrease by at least 2-4%. The key factors are the high ruble exchange rate, weak demand in foreign markets (including China, a key buyer), and stagnation in the domestic construction industry. According to analysts, only large technology companies will remain profitable.

The market is losing height: statistics and forecasts

    The industry's decline has been going on for several years in a row. In 2025, the production of softwood lumber decreased by 2.5% and amounted to 28.5 million cubic meters (according to Rosstat). The WhatWood agency recorded a 4% drop in the first four months of 2026 alone.

Forecasts of market participants differ:

• - Strategy Partners (basic scenario): a decrease of 2-4% by the end of the year.
• - Nikolay Ivanov (Segezha Group Vice President): the drop may amount to 5-7% in 2026. He characterizes the situation in the global sawmill industry as a structural crisis.
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Margin pressure: ruble exchange rate and export markets

    The ruble exchange rate remains the main factor determining the profitability of exporters.

The impact of the exchange rate on marginality:

•     - At the current exchange rate, strong companies maintain margins at 5-7%.
•     - Medium-sized enterprises operate on the verge of zero profitability.
•     - Weak companies sell products at a loss.
•     - A weakening of the ruble to 90 rubles/$ would return marginality to the usual 10-15%.
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Chinese supplies are being squeezed:

•     - In the first quarter of 2026, shipments of softwood lumber to China fell by 26% to 2.6 million cubic meters.
•     - Canada and Belarus are actively increasing their presence in the Chinese market.
•     - In the summer, with the normalization of logistics, further price reductions are expected.
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Uzbekistan as an alternative:
    Russian exporters are increasingly reorienting to Uzbekistan, but prices there are 15-25% lower than Chinese ones. An additional barrier remains the overloaded infrastructure of the Eastern Landfill and the low turnover of wagons.

Key indicators of the Russian lumber market:

Threat of closure: small and medium-sized enterprises under attack

    Nikolai Ivanov warns that small and medium-sized sawmills in the Northwest and Siberia are facing closure. This is due to the high debt burden, rising rent payments and the difficulty of accessing subsidies for transportation costs. By the end of 2026, according to experts, every second LPC enterprise, including some major players, may leave the market.

Survival strategy: from raw materials to highly processed products

    To overcome the crisis, the business proposes to switch from exporting raw lumber to producing high-value-added products.

Priority areas according to Segezha Group:

• - House kits and CLT panels for wooden house construction.
• - Fuel pellets for the energy sector.
• - Forest chemical products.
• - Fibers for the textile industry.
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Conditions for implementation:

•     - Creation of modern biotechnological complexes.
•     - Long and cheap loans.
•     - Contracting of large residential complexes (LCCs).
•     - Localization of finishing plants in special economic zones of friendly countries.

    The industry has entered a deep transformation phase. Extensive growth and focus on exporting raw materials are being replaced by an era of survival and fierce competition for added value. The government and business will have to jointly decide how to prevent collapse and preserve the potential of the Russian LPC.

Tags: #Russia #lumber #LPC #forecast #StrategyPartners #SegezhaGroup #ruble exchange rate #export #China #Uzbekistan