44

Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

  • Upload
    others

  • View
    2

  • Download
    0

Embed Size (px)

Citation preview

Page 1: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian
Page 2: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Content

Union of Timber Manufacturers and Exporters of Russia

1. General economic trends. Crisis or new reality?

2. Forest products markets current situation

3. Forest industries sector’s challenges

4. Development trends and the Russian state policy in the

forest industries sector

2

Page 3: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Union of Timber Manufacturers and Exporters of Russia

1. General economic trends. Crisis or new reality?

3

Page 4: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

4

Basic macroeconomic indices and forecast for 2014-2018(against the previous period, %)

Union of Timber Manufacturers and Exporters of Russia

Source: Ministry of Economic Development of the Russian Federation (Mineconomrazvitiya)

Indices 2014 2015January-August

2016e 2017f 2018f2015 2016

GDP 100,7 96,3 96,2 99,3 99,8 100,8 101,8

Consumer Price Index 111,4 112,9 109,8 103,9 106,5 104,9 104,5

Index of industrial production 101,7 96,6 96,8 100,4 100,0 101,1 101,7

Capital investment 97,3 91,6 91,2 96,1 96,9 100,8 103,0

Construction 95,5 93,0 91,6 95,4 99,4 102,4 n/a

House completions 118,2 99,5 110,2 94,2 n/a n/a n/a

Real wage of population 101,3 90,7 91,1 99,7 98,5 101,2 101,3

Unemployment rate 5,4 5,8 5,6 5,6 5,8 5,8 5,8

Retail trade turnover 102,5 90,0 91,3 94,3 97,3 101,1 102,6

Paid services 101,3 98,0 98,4 99,4 99,3 101,2 102,7

Export (bill. dollars USA) 497,8 341,5 234,0 173,6 288,5 293,5 301,7

Import (bill. dollars USA) 308,0 193,0 125,3 118,0 179,8 187,3 195,8

Page 5: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Forecast 2016-2017

Union of Timber Manufacturers and Exporters of Russia 5

2013 2014 2015 2016F 2017F

GDP, real, % 1,3 0,7 -3,7 0,5 1,8

GDP, nominal, billion dollars 2,232 2,053 1,332 1,250 1,400

Inflation, December / December , % 6,5 11,4 12,9 6,1 4,2

Current account,% of GDP 1,7 3,1 5,7 3,5 3,0

Budget balance,% of GDP -0,5 -0,4 -2,4 4,0 -3,5

USD\RUB, average 31,82 37,97 60,66 68,50 65,00

The price of oil (Urals), average, $/bar 108 98 53 44 54

Source: Ministry of Economic Development of the Russian Federation (Mineconomrazvitiya)

Page 6: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Forecast of economic development in Russia

EIU МED RF IMF

6+4% p.a.

3

2

A SOURCE : Forecast MED RF, EIU, IMF 25

3

+1% p.a.

+1% p.a.

-2

The growth rate1 of real GDP of the RF, 2016-2030, The growth rate of industrial production of the RF, 2016-2030,

%, YoY %, YoY

+3% p.a.

4 +1% p.a. 2 +2% p.a.

2 1

2016 18 20 22 24 26 28 2030 2016 18 20 22 24 26 28 2030

Real GDP growth per capita in the RF, 2016-2030, The growth rate of real disposable income population

%, YoY 2016-2030 гг., %, YoY

5 +4% p.a. 6 +4% p.a.

4 4

2

1 2016 18 20 22 24 26 28 2030

2016 18 20 22 24 26 28 2030 -4

6Union of Timber Manufacturers and Exporters of Russia

Page 7: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Union of Timber Manufacturers and Exporters of Russia

2. Forest products markets current situation

7

Page 8: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

8Union of Timber Manufacturers and Exporters of Russia

Production 20141)

14/13

%20152)

15/14

%

January-

August

20162)

January-

August

16/15 %

2016e3)

16e/15

%

Roundwood, mln.m³ 203,0 104,4 205,51) 101,2 82,84) 107,8 209,8 102,1

Incl. Softwood roundwood, mln. m³ 135,5 104,4 137,01) 101,1 52,54) 111,5 140,0 102,2

Lumber, mln. m³ 34,6 103,3 34,71) 100,3 15,14) 106,3 36,5 105,2

Incl. Softwood lumber, mln. m³ 32,1 102,9 32,21) 100,3 14,03) 106,1 34,0 105,6

Plywood, 1000 m³ 3540,3 107,2 3606,7 101,9 2513,6 103,5 3719,4 103,1

Chipboards, mln. m³ 6,81 102,3 6,8 99,8 4,62 106,7 7,1 104,4

Fiberboards, mln. m² 432,3 103,3 500,4 115,7 345,9 103,0 515,9 103,1

Market pulp, 1000. t 2258,6 109,9 2493,5 110,4 1722,7 105,0 2584,0 103,6

Paper and Paperboard, 1000 t 8023,0 103,6 8061,1 100,5 5644,4 106,8 8466,6 105,0

Sources: 1) FAOSTAT data

2) Rosstat data

3) UTMER estimate

4) Rosstat data without taking into account the production of small-scale enterprises

Forest goods production development in Russia, 2014-2016

Page 9: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

9Union of Timber Manufacturers and Exporters of Russia

Source: Ministry of Economic Development of the Russian Federation (Mineconomrazvitiya)

60,0

70,0

80,0

90,0

100,0

110,0

120,0

130,0

140,0

150,0

160,0

2010 2011 2012 2013 2014 2015 2016e

Roundwood Sawnwood Chipboards

Hardboards Plywood Pulp

Paper and Paperboard

Russian forest industries production development, 2010-2016

(2010 – 100%)

Page 10: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

10

Logging, 2010-2016

Union of Timber Manufacturers and Exporters of Russia

Source: FAOSTAT, UTMER

2010 2011 2012 2013 2014 2015 2016e

Rowndwood, mln. m3 175,5 191,2 192,1 194,5 203,0 205,5 209,8

Softwood roundwood, mln. m3 117,7 127,6 128,2 129,8 135,5 137,0 140,0

0

50

100

150

200

250

+19,5%

Page 11: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

11

Softwood roundwood production, export, import and apparent

consumption, 2010-2016

Union of Timber Manufacturers and Exporters of Russia

Source: FAOSTAT, UTMER

117,7

127,6 128,2 129,8135,5 137,0

140,0

16,7 16,6 12,9 12,4 13,7 11,3 12,1

109,3

97,0

115,3 117,4 114,3125,7

127,9

-40,0

-20,0

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

mln

. m

³

Production Export Apparent consumption

2010 2011 2012 2013 2014 2015 2016e

Page 12: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

12Union of Timber Manufacturers and Exporters of Russia

Japan 150,8

CIS 343,1

Finland 3543,1

China 8702,6

Others 536,0

According to market experts’ estimation in 2016 logs export, incl. hardwood logs and pulpwood, will

increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian log export in the first 8

months of 2016 amounted to 13,3 mln.m3. China and Finland remain key markets for the Russian logs

exporters.

Source: Customs statistics, UTMER

Russia’s roundwood export, key marketsJan.-Aug. 2016

1000.m3

Page 13: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

13

Lumber production, 2010-2016

Union of Timber Manufacturers and Exporters of Russia

Source: FAOSTAT, UTMER

28,9

31,2

32,2

33,5

34,634,7

36,5

26,4

29,1

30,0

31,2

32,132,2

34,0

22

24

26

28

30

32

34

36

38

2010 2011 2012 2013 2014 2015 2016e

Sawnwood, mln. m3 Softwood sawnwood, mln. m3

Page 14: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

14

Softwood lumber production, export, import and apparent

consumption, 2010-2016

Union of Timber Manufacturers and Exporters of Russia

Source: FAOSTAT, UTMER

26,429,1 30,0 31,2 32,1 32,2

34,0

17,118,8 19,4 20,6 21,4

22,425,9

9,3 10,3 10,6 10,6 10,0 9,1 8,1

-30

-20

-10

0

10

20

30

40

2010 2011 2012 2013 2014 2015 2016e

mln

. m

³

Production Export Apparent consumption

Page 15: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

15Union of Timber Manufacturers and Exporters of Russia

Importing countries 20142014/2013

+/- %2015

2015/2014

+/- %

January-June2016/2015

+/- %2016е*

2015 2016

Germany 419,8 -4,9 451,7 +7,6 221,7 247,1 +11,5 503,5

Baltic States 703,3 +11,8 842,1 +19,7 401,1 539,8 +34,6 1133,3

Netherlands 293,9 +1,6 342,0 +16,4 158,1 171,0 +8,2 369,9

Finland 434,3 +2,9 478,8 +10,2 238,8 236,2 -1,1 473,6

France 305,5 +5,4 289,5 -5,2 119,2 137,4 +15,3 333,7

UK 316,8 +14,7 371,0 +17,1 173,4 135,8 -21,7 290,6

Others 473,8 -5,1 509,7 +7,6 259,1 256,4 -1,0 504,4

EU 2947,4 +3,5 3284,8 +11,5 1568,4 1723,7 +9,9 3610,1

Azerbaijan 981,8 -3,2 697,1 -29,0 403,4 301,6 -25,2 521,2

Tajikistan 1027,2 +8,2 678,5 -34,0 303,5 156,5 -48,4 349,9

Uzbekistan 2778,1 +5,2 2386,0 -14,1 1144,3 982,9 -14,1 2049,5

Others 1102,5 +2,5 1028,0 -6,8 530,7 433,1 -18,4 838,9

CIS 5889,6 +3,7 4789,6 -18,7 2381,9 1874,1 -21,3 3768,5

Egypt 1491,6 +8,6 2059,7 +38,1 1031,7 853,9 -17,2 1704,7

Iran 654,6 -12,1 776,2 +18,6 383,2 352,8 -7,9 714,6

China 8344,6 +11,2 9774,2 +17,1 4644,6 6524,0 +40,5 13729,3

South Korea 272 -12,8 381,8 +40,4 160,8 215,4 +34,0 511,4

Japan 826,7 -12,7 844,5 +2,2 423,6 473,3 +11,7 943,6

Others 1251,7 +7,7 1156,9 -6,7 588,5 528,0 -10,3 1038,0

Total 21678,2 +5,4 23067,7 +6,4 11182,7 12545,2 +12,2 25878,3

Sources:Customs Statistics

* - UTMER estimate

Softwood lumber export from Russia, 2014-2016, 1000 m3

Page 16: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

16Union of Timber Manufacturers and Exporters of Russia

53,0%

-14 %- 6,6%

3,6%

4,4%

- 2,8%

1,9%

-1,8%

-1,1%

Sources:Customs Statistics

* - UTMER estimate

Share of the total

Major softwood lumber export destination, 2015-2016

Page 17: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

17

Wood-based panels production, 2010-2016

Union of Timber Manufacturers and Exporters of Russia

Source: Rosstat, UTMER

Plywood, 1000 m3 Chipboards, 1000 m3

Fiberboards, mln.m2

2686,5

3030,8

3180,9

3334,6

3561,3 3606,7 3719,4

2400

2600

2800

3000

3200

3400

3600

3800

2010 2011 2012 2013 2014 2015 2016e

5465,9

6487,6

6729,46652,1

6825,3 6801,37100,0

5200

5700

6200

6700

7200

2010 2011 2012 2013 2014 2015 2016e

397,7

452,8 453,5

426,1

468,6

500,4 515,9

350

370

390

410

430

450

470

490

510

530

2010 2011 2012 2013 2014 2015 2016e

Page 18: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

18Union of Timber Manufacturers and Exporters of Russia

Source: Rosstat, UTMER

Plywood apparent consumption, 2010-2016

42262 262 241

80 71

2686

31813335 3561 3607 3719

1529 1644 17571969 2209

2520

1200

17981840 1834

14771270

-3000

-2000

-1000

0

1000

2000

3000

4000

5000

2010 2012 2013 2014 2015 2016e

10

00

m3

Export

Production

Import

Consumption

Page 19: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

19Union of Timber Manufacturers and Exporters of Russia

2010 2012 2013 2014 2015 2016e

Chipboards, mln.m3

Production

Export

Import

Consumption

2010 2012 2013 2014 2015 2016e

Fiberboards, mln. m2

Production

Export

Import

Consumption

Wood-based Panels Apparent Consumption, 2010-2016

Sources: Rosstat, FAOSTAT, UTMER

Page 20: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

20Union of Timber Manufacturers and Exporters of Russia

0,0

1000,0

2000,0

3000,0

4000,0

5000,0

6000,0

7000,0

8000,0

9000,0

20102012

20132014

20152016e

Paper and Paperboard, 1000 t

Pulp, 1000 t

Market pulp, 1000 t

Experts estimate that

in 2016 the volume of

pulp production in

Russia will grow by

3,6%, paper and

paperboard - by 5%

compared to 2015

Pulp, paper and paperboard production, 2010-2016

Source: Rosstat, UTMER

Page 21: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

21Union of Timber Manufacturers and Exporters of Russia

Pulp apparent consumption, 2010-2016

Source: Rosstat, UTMER

60 92 181 190 208 186

7510 7658 72117537 7871 8157

21852725

23862489 2487

2385

5385 5025 5006 52985592

5958

-4000

-2000

0

2000

4000

6000

8000

10000

2010 2012 2013 2014 2015 2016e

10

00

t

Export

Production

Import

Consumption

Page 22: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

22Union of Timber Manufacturers and Exporters of Russia

Paper and paperboard apparent consumption, 2010-2016

1110

18812185

1792 1484 1495

5606

76707747 8023 8061

8467

2649 2665 2670 2893 2898 3052

4067

6886 72626922 6647 6910

-5000

-3000

-1000

1000

3000

5000

7000

9000

11000

2010 2012 2013 2014 2015 2016e

Export

Production

Import

Consumption

Source: Rosstat, UTMER

Page 23: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

23Union of Timber Manufacturers and Exporters of Russia

The Russian wood, pulp and paper products export, 2000-2016

4,5

8,3

9,6

11,3

9,9

10,5

11,2

9,8

4,1

7,2

7,8

8,9

7,8

8,3

9,0

8,1

0,4

1,2

1,8

2,4

2,3

2,6

2,7

1,7

0 2 4 6 8 10 12 14

2000

2005

2010

2011

2012

2013

2014

2015

Bln. US dollars

Ye

ars

Export to the CIScountries

Export to othercountries

Export total

In Jan.-Aug. 2016 ,

Russia’s forest

products export

amounted to 6,4

bln. US dollars,

incl. export to CIS

countries –

1,1,bln.US dollars

and to the other

countries – 5,3 bln.

US dollars.

Source: Rosstat, Customs statistics, UTMER

Page 24: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

24

The Russian wood, pulp and paper products import, 2000-2016

Union of Timber Manufacturers and Exporters of Russia

1,3

3,3

5,9

6,7

5,2

5,7

5,0

3,6

1,0

2,7

4,9

5,5

4,0

4,2

3,9

2,9

0,3

0,6

1,0

1,2

1,2

1,5

1,1

0,7

0 2 4 6 8

2000

2005

2010

2011

2012

2013

2014

2015

Bln. US dollars

Ye

ars

Import to the CIScountries

Import to othercountries

Import total

In Jan.-Aug. 2016 ,

Russia’s forest

products import

amounted to 2,2

bln. US doll., incl.

import from CIS

countries –

0,4,bln.US doll. and

from the other

countries – 1,8 bln.

US doll.

Source: Rosstat, Customs statistics, UTMER

Page 25: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Union of Timber Manufacturers and Exporters of Russia

3. Forest industries sector’s challenges

25

Page 26: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

26Union of Timber Manufacturers and Exporters of Russia

Demographic growth and the

gradual increase of welfare of

the population (expected

recovery of the global

economy) that stimulate the

growth of consumption,

including products of the

forest sector

The shift of consumption

towards natural and organic

products in developed

countries (consumption

growth of packaging paper

and paperboard, building

materials and wood furniture);

the lack of available

substitutes in developing

countries

Extension of application areas

of the forest products sector:

cellulose fibers in the light

industry, timber frame

construction

The new energy policy, aimed at

increasing the use of biofuels,

including wood fuels (pellets and

briquettes)

Further digitalization and a

reduction in demand for paper for

printing

Development (promotion) of wooden

construction, including multi-storey

construction

Some key factors determining development and structural

changes of the forest sector

Page 27: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

27

Russia's domestic market

Union of Timber Manufacturers and Exporters of Russia

Pulp and paper products:

fluff pulp

dissolvable pulp

Sanitary products

Containerboard

Coated paper and paperboard

Kraft paper and bags

Woodworking

Modernization of the existing production of boards (particle board, OSB, MDF)

The development of deep processed elements of wooden housing

Special types lumber

Engineered wood products (CLT, LVL, Glulam)

Birch plywood

House-building

Wood fuel for local use in forest regions replacing hydrocarbons

Page 28: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

28Union of Timber Manufacturers and Exporters of Russia

Products Markets

Pulp and paper products:

BSKP/UKP

Dissolving pulp

Containerboard

Kraft paper and bags

China, Asia-Pacific, Europe

Woodworking

Lumber, elements of wooden housing construction

Special types of sawn timber,

Engineered wood products (CLT, LVL, Glulam)

Birch plywood

Europe, China

Asia-Pacific,

Pellets from regions neighbors to customer Europe, Asia-Pacific, China

Export markets

Page 29: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

44

(37%)

37

(35%)

33

(28%)

39

(37%)

2014

107

30

(28%)

2016

42

(35%)

42

(36%)

34

(29%)

2013

101

35

(35%)

35

(35%)

31

(30%)

2012

94

33

(35%)

33

(35%)

28

(30%)

2011

84

32

(38%)

30

(36%)

22

(26%)

2010

80

28

(35%)

30

(38%)

21

(27%)

2009

82

29

(35%)

31

(38%)

23

(27%)

2008

87

33

(38%)

31

(35%)

23

(27%)

2007

85

35

(41%)

26

(31%)

24

(28%)

2006

64

32

(50%)

19

(29%)

13

(21%)

2005

55

30

(54%)

14

(25%)

11

(21%)

-4%

+8%

+12%

0%

40

(36%)

31

(28%)

41

(35%)

119

+24%

2020

132

49

(37%)

45

(34%)

38

(28%)

43

(36%)

42

(36%)

34

(28%)

2019

109

39

(35%)

38

(36%)

105

2017

38

(36%)

29

(28%)

118 119

2015 2018

Estimated construction market volume in Russia by 2020 will total around 130

million square meters, of which low-rise real estate will comprise around 45

million square meters

Commissioning of residential and non-residential buildings overview

in Russia from 2005 – 2020

• Growth in low-rise house construction segment (1-3 storeys) for the period from 2005 to 2015 was 27 m m2 (2.7 m m2/year,

estimated growth between 2016-2020 will total 8 m m2 (2 m m2/year)

• Growth in non-residential house construction segment for the period from 2005 to 2015 was 22 m m2 (2.2 m m2), estimated

growth between 2016-2020 will total 8 m m2 (2 m m2/year)

• Estimated rate of construction volume growth for the period from 2017 to 2020 (in the base case scenario) will be lower (8%

annually) as compared to the same post-crisis period in 2012-2014 (12% annually)

Forecast4+ storey residential buildings

1-3 storey residential buildings

Non-residential buildings

Target segments

million m2 per year

Union of Timber Manufacturers and Exporters of Russia 29

Page 30: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

107119118

10194

8480828785

6455

-5%+17%

-5%+10%

2012

48,243,7

48,152,5

20092008

50,2

2007

47,5

2010

47,7

2011 2015

51,551,7

20142013

36,2

20062005

25,4

+6% -3%

+27%

-6%

2016

48,9

Commissioning of

buildings in Russia in

2005-2016

Housing prices in

Russia in

2005-2016

• Historically the housing market in Russia has correlation between housing prices and volume of commissioned real estate (the volume

of market supply); where there is excess of supply in the previous period the housing price comes down in the subsequent year (1 year

time lag)

• Thus, if the commissioning exceeds sales in the previous period and the developers still have vacant housing stock, then they tend to

adopt price markdown and volume decrease of new housing construction in the following period (as in 2008-2012)

• A similar situation can be observed in 2015-2016 and price markdown new housing commissioning can be expected within the next 1-3

years, followed by growth recovery (expected start from 2018) with rebound in commissioned housing and price surge.

Despite ongoing minor slowdown in real estate commissioning and

property prices decline throughout 2015-2016…

million m2

RUR thous.

30Union of Timber Manufacturers and Exporters of Russia

Page 31: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

... Anticipated economic growth recovery starting from 2018 will be a

driver for the construction sector recovery

Dynamics of GDP in Russia in constant prices

(compared to the period of 2010)

Real per capita wages in Russia

(compared to the period of 2010)

-1%

106%

2014

110%

2013

109%

2012

108%

2011

104%

2010

100%

2020

113%

2019

111%

2018

109%

2017

107%

2016

106%

2015

+2%

+2%

2013

117%

2012

111%

2011

103%

2010

100%

2020

115%

111%

2018

107%

2017

105%

2016

106%

2015

107%

2014

118%

2019

+4% +3%-4%

• GDP growth in Russia will resume in 2017 and by 2019 it will reach pre-crisis level

• As a result – real wages growth in Russia will resume by 2018, pre-crisis level will be reached by 2020

• Rise in real per capita income will have a positive effect on real estate demand

% %

31Union of Timber Manufacturers and Exporters of Russia

Page 32: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Low-rise individual housing construction is least exposed to economy

slowdown (as illustrated by economic recession in Russia in the

period from 2008-2010)

4+ storey

residential

buildings

Non-residential

buildings

33,231,828,128,8

33,3

20122011201020092008

-16%

28,1

21,621,222,623,3

-9 %

1-3 storey

residential

buildings

32,530,430,331,130,7

-1 %

Types of buildings Comments

Rate of buildings commissioning

(2008-2012)

• Decline in commissioning rates

over the previous crisis period

from 2008-2010 varied for main

housing segments:

– 1% decline in low-rise

housing construction

– 9% decline in non-residential

housing segment

– 16% decline in multi-storey

residential housing segment

million m2

32Union of Timber Manufacturers and Exporters of Russia

Page 33: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

In 2015 wooden house-building comprised 20% of low-rise residential

housing market in Russia

6 436

8 258

6 174482 191

601 425

1 178

2 359

40 792

34 356

11 795

8 1865 947

8 2016 716

Total brickEconomy EconomyEconomy Total

individual

Total

Low-rise

PremiumBusinessPremium Premium Business OthersTotal

blocks/concrete

Total

wood

3-storey

standard

Business

Brick Blocks/concrete Wood

Market volume of low-rise house-building in Russia, 2015

70

50

28

70

50

26

80

60

26

Prices1 for main classes of individual houses (thous. RUR)

29%

20%

20%

xx%Segment share in total volume

of low-rise housing market

• Over 34 mln m2 – account for individual low-rise construction, indicative market volume is approx. RUR 850 bn

• Over 8 mln m2 – account for wooden house-building, indicative market volume is approx. RUR 137 bn

thous. m2

Union of Timber Manufacturers and Exporters of Russia 33

Page 34: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Wooden house-building

Wooden house-building has price advantage over brick and gas-

concrete blocks

Cost curve for various house construction technologies applied to 120 m2 houses

• “Economy" – houses in accordance with minimum requirements of Constructions Norms and Regulations

• “Business" – houses corresponding to comfortable accommodation category

• “Premium" – business class houses with high-end finishing, cost can reach up to RUR 140 thous. per m2 and more

0

100

30

10

50

20

40

80

70

90

60

от 75

35

18

Premium

14

Economy

107

Business

20

10

10

16

26

от 73

Economy

29

Premium

4

9

18

7

13

EconomyBusiness

30

9

от 25

19

38

1218

12

Economy

43

“Turnkey” price for m2

(RUR thous.)

от 56

21

Premium

33

от 23

44

18

Business

8

11

40

Economy

29 от 25

15

13

10

6

17

Premium

от 64

21

18от 25

23

16

Business

51

Premium

1113

12

12

от 48

9

BusinessEconomy

от 49

6

18 5

19от 21

29

13

11

28

5

18

9

Premium

от 20

9

Business

Other materialsHouse set materials (walls) Works

Glulam CLT Frame-panel SIP panels Gas-concreteBrick

34Union of Timber Manufacturers and Exporters of Russia

Page 35: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

At the federal level residential construction is supported under

8-10 general state and departmental programs

Subprogram

“Creating mechanisms

aimed at providing

Russian citizens with

affordable and

comfortable housing”

Subprogram

“Creating mechanisms

aimed at providing

Russian citizens with

high-quality housing

and utility services”

FCP “Housing" for

2015 - 2020

Program “Housing for

the Russian family"0

0

68 518

5 234

8 245

19 630

13 731

1 675

1 545

1 503

2 434

4 477

10 043

Main campaign “EBRD project implementation “Housing and utilities reform in Russia “

Main campaign «Preparation of utility infrastructure, ensuring operation of sport facilities within the

2018 “Football World Cup” hosted in Russia

Main campaign «Assistance in utility and engineering infrastructure development of federal subjects’

property (municipal property)

Subprogram “Modernization of municipal infrastructure facilities” under the FCP “Housing” for 2015-

2020 (5 subprograms)

Subprogram «Providing housing for young families” under FCP “Housing” for 2015 - 2020

Subprogram «Enhancing the housing construction programs development of federal subjects under FCP

“Housing“ for 2015-2020

Subprogram “Housing provision for certain categories of citizens” under FCP “Housing” for 2015-2020

(7 subprograms)

Main campaign «Relocation of citizens from multi-family unfit housing facilities subject to demolition

and not part of current resettlement programs”

Main campaign “Providing housing

for certain categories of citizens”

Subventions for housing provision for World War II veterans

Subventions for housing provision for veterans disabled people

Total

Source: FA “On the federal budget for 2016; Resolution of RF government dd. May 5, 2014; working group’s analysis

Budget for 2016 Description of federal programs in the sphere of residential construction

н.д.

RUR mln.

Additional commissioning of at least 25 mln. m2 of economy class housing for citizens registered as

needing better housing. Economy class houses are built by developers under the state program and are

commissioned to the state, federal subjects of the Russian Federation or to the citizens at a fixed price.

The subjects of the Russian Federation are in charge of implementing the program and identify priority

categories of citizens registered as in need

Union of Timber Manufacturers and Exporters of Russia 35

Page 36: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Average market price of a square meter of housing, used to calculate

subsidies within the state programs, varies by federal subjects

Source: RF Ministry of housing and construction order dd. 7 April, 2016 N 218; working group’s analysis

Москва

Krasnodar Territory

Stavropol Territory

Republic of Kalmykia

Rostov Region

Volgograd Region

St. Petersburg

Republic of Karelia

Tver Region

Saratov Region

Vologda Region

Arkhangelsk Region

Kostroma Region

Nizhny Novgorod Region

Republic of Bashkortostan

Perm Territory

Murmansk Region.

Sverdlov Region

Tyumen Region

Omsk Region

Khanty-Mansi AA

Yamalo-Nenets AA

Komi Republic

Nenets AA

Krasnoyarsk Territory

Tomsk Region

Novosibirsk Region

Altai Territory

Republic of Altai

Republic of Tyva

Irkutsk Region

Republic of Buryatia

Zabaikalye Territory

Amur Region

Primorsk Territory

Republic of Sakha

Khabarovsk Territory

Sakhalin Region

Magadan Region

Chukotka AR

Kamchatka Territory

Kaliningrad Region

90+

50-60

45-50

40-45

35-40

<35

RUR thous. per m2

The assessment of housing market price in order to determine the volume of subsidies

obtained for housing purchase/construction under the state programs

RUR thous. per m2 for Q2 2016

36Union of Timber Manufacturers and Exporters of Russia

Page 37: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

For participation in state supported construction projects the participant

must comply with a number of requirements (“economy class” housing)

Source: RF government decree dd. 5 May 2014 N 404; order of the Ministry for Housing and Construction dd. 05.05.2014 N 223; working group’s analysis

"...does not exceed minimum value – RUR 35 000 or 80% of estimated market

value per square meter of total area..."

“Maximum economy class housing price can be increased up to RUR 5 000 per

square meter of total area…”

“Separate standing residential house…, a block, forming part of multi-block

residential house, having not more than 3 storeys…” or “an apartment in

multifamily residential building”

“ Total area of residential property makes:

а) not more than 150 square meters, if a dwelling unit is a residential house or a

block…

б) not more than 100 square meters, if a dwelling unit is an apartment”

“Energy efficiency class is not less than "В" (High)"

«Interior finishing of a dwelling unit…and installation of engineering

equipment, including accounting of water, heat, energy and gas consumption”

“Availability of social infrastructure and utilities, engineering and maintenance

facilities..."

«Optimal living conditions for the disabled and other people with limited

mobility..."

Presence and spatial availability of such objects

must conform to the settlement development

standards

Under the government decree of the Russian

Federation dd. 21.03.2006 N 153 cost estimates are

performed by the Russian Ministry for Housing and

Construction. For instance, as of the second quarter

of 2016 average market value per square meter

• in Moscow was at: RUR 90 400

• Arkhangelsk Region: RUR 42 222

• Krasnoyarsk Territory: RUR 39 238

Energy efficiency class of residential and municipal

buildings is defined by “CD 50.13330.2012. A

building is assigned class "B“ only in case if the

following energy-efficiency measures are included in

the project

• Installation of individual heat supply stations,

reducing energy consumption on circulation in hot

water systems and fitted with automated control

systems and accounting systems for energy , cold

and hot water consumption

• Application of energy-saving lighting systems for

communal space, equipped with motion and

brightness sensors

• Application of reactive power compensation units

for elevator motors, pumping and ventilation units

Energy-

efficiency

requirements

Price per

square meter

Size of building/

apartment

State of

readiness for

commissioning

37Union of Timber Manufacturers and Exporters of Russia

Page 38: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Cottage estate

Vitro Country

Example. General information on types of development and

specified development projects in Moscow Region

KSb Facility

«Serebryany Bor»

Moscow

Klinsky Area of

Moscow Region

Union of Timber Manufacturers and Exporters of Russia 38

Page 39: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

39Union of Timber Manufacturers and Exporters of Russia

Bioenergy in Russia

Russian market of wood pellets in 2015 increased by more

than 60 000 t. It shows a steady growth in production and

exports

Pellets: 2014 2015 %

Production 913,3 974,0 106,6

Export 879,0 934,9 106,4

Import 1,3 2,2

Consumption 35,6 41,3 116,0

Source: FAOSTAT,Ministry of industry

Page 40: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Union of Timber Manufacturers and Exporters of Russia

4. Development trends and the Russian state policy

in the Forest industries sector

40

Page 41: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

The process of strategy development involves a large number of

stakeholders

Working groups for product segments with the Expert Advisory Board

7

Project group(With the participation of the

Department)

Representatives of industry

and expert community

Bioenergetics

Furniture and

plywood board

industry

Wooden housing

construction and

woodworking

Pulp and paper

industry

Forestry

(Ministry of Industry

and Russia)

Forestry(Federal Forestry

Agency)

Expert Advisory Board(Russian Industry and Trade Ministry)

Union of Timber Manufacturers and Exporters of Russia 41

Page 42: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Defining the strategic objectives of

the Forest Complex of the RF

Formation of 2-3 strategic

alternatives of development of

Russian forest complex

Evaluation of strategic alternatives

of the Russian Federation, the

development of alternatives to the

forest complex and the choice of an

alternative target

Formation of a mechanism for

monitoring and adjusting the action

plan

The strategy is being developed in three steps - analysis of the strategiccontext of the industry, the definition of target vision and initiatives toachieve it, the formation of an action plan

The approach to the development of the Strategy of development of the forest complex of the Russian Federation until 2030

Plan of measures, KPIs

and responsibleStrategic context

Target vision Forest Complex of the Russian Federation and initiatives to achieve it

1 — in line with expectations MED RF (basic, conservative and target)

3

Preparation of risk maps and

recommendations on ways to

minimize the risks identified

Consideration of proposals with

regard to forestry development

Analysis of the product segments

of the Forest Complex of the RF

and the formation of strategic

development

Determination of control points,

resources and responsibleEvaluation Strategy by comparing

the effects in the context of 3

external scripts1 and 2 of

development options:

inertial

(implementation of the current

Strategy 2020)

Innovation

(strategic initiatives)

Defining KPIs and target valuesMonitoring the implementation of

the current Strategy for the

Development of the Forest

Complex of the RF until 2020

Formation of the target portfolio of

strategic initiatives to achieve the

target, and alternative mechanisms

for their implementation

Develop a plan of action to

implement the Strategy

Union of Timber Manufacturers and Exporters of Russia 42

Page 43: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Приморс кий кр

1

The analysis of the priority regions for setting of new forest clusters

Examples of possible projects PLANTSTop 15 regions in terms of unusedthe estimated annual allowable cut

The area radius of 300 km with an estimate of the availability of resources for the construction of a new pulp and paper mill

The radius of 300 km of existing plants with a capacity of

more than 200 thous. Tons, affecting priority regions

Vologda(~ 1 million. tons)

1

Tomsk (~ 500 thous. tonnes)2

Vorsino (~ 130 thous. tons of hygiene products)3

Murmansk region.

North West the high density of existing

plants

Karelia

Leningrad region

Kaliningrad region

Nenets

Autonomous Okrug

Pskov regionKomi

Novgorod regionArkhangelsk

Vologda

District 6

Yakutia

District 9

Krasnoyarsk regionYamalo-Nenets

Autonomous Okrug

3 Sakhalin region

District 5District 4

Khanty-Mansi Autonomous

OkrugKemerovo regionPerm region

Sverdlovsk region

District 8District 3 District 2Tomsk region Amur region

District 1

2

Tyumen region

Kurgan region

District 7Jewish Autonomous Region

Omsk region

Kemerovo regionNovosibirsk region

Transbaikal regionIrkutsk region

In the Khabarovsk

Territory can be

expanded up to 500 km

radius due to the effect of sawlogs

Khakassia

Altai regionBuryatia

Tyva

Altai

In the Irkutsk region unused cut

is not close to the plant, it is

distributed over a large area

33

Union of Timber Manufacturers and Exporters of Russia 43

Page 44: Content · According to market experts’estimation in 2016 logs export, incl. hardwood logs and pulpwood, will increase to about 20 mln.m3 or by 3,1% as compared to 2015. The Russian

Thank you!