MDF to become driver of Russian panel market in coming years

The Russian panel market is steadily recovering from the consequences of the economic crisis in the country caused by the devaluation of the ruble and western sanctions, according to a recent report by the Russian Ministry of Industry and Trade.

The Ministry analysis finds that the Russian panel market has declined by about 30% over the last two years. The main cause , as reported in the preceding article, was the stagnation of the domestic furniture industry, the main consumer of panels in Russia.

However, since the beginning of 2016 panel production in Russia has been growing. This is reflected in the resumption or implementation of many investment projects which were suspended during Russia's economic crisis.

Oleg Numerov is head of the Russian Association of Enterprises of Furniture and Woodworking Industries, a public association which unites Russia’s leading furniture producers. He said that the economic crisis in Russia caused a serious crisis in the domestic furniture and other major consuming industries; and this in turn resulted in a significant decline in demand for panels in Russia.

The decline in domestic demand, and devaluation of the ruble, have forced producers to re-orient their supplies to foreign markets and in particular to the markets of neighbouring states and the CIS region – the countries that made up the former Soviet Union.

However, domestic demand has been in active recovery since the beginning of the current year.

In terms of further growth, MDF currently remains the most promising segment of the Russian panel market. Given planned commissioning of new production capacities it is possible that this will continue to grow in the coming years.

The rapid recovery of MDF production is confirmed by leading local producers, as well as by major global players operating in Russia.

Kastamonu Russia is a subsidiary of one of Europe’s largest wood processing enterprises, headquartered in Turkey. Its Russian plant is located in the Alabuga special economic zone of the Tatarstan Republic; with an annual production capacity of 1,050m3 of MDF per year, it remains the largest MDF facility in the continent in terms of annual production. Jack Byuyyuktosun is Kastamonu Russia’s director of sales and marketing. According to him, the volume of panel production in Russia is steadily growing, while MDF is gradually replacing particleboard in the market.

He comments: "The trend of import substitution in the Russian market of wood based panels will continue to grow in the near future. Already the existing installed capacities of MDF can fully meet local demand for this panel. Due to this, many local producers, and global producers operating production facilities in Russia, are already considering a significant increase in exports for this year”.

Mr Byuyyuktosun adds that the development of woodworking technologies in Russia will also contribute to the development of the national panel industry in the coming years.

This view is shared by Denis Manturov, Russia’s Minister of Industry and Trade (and the person who is responsible for the development of the panel industry in the Russian government). According to Mr Manturov, the Russian board industry will continue its active development next year and will be dominated by production facilities with high unit capacity, whose production lines are mostly equipped with continuous presses.

The ongoing recovery of the industry is also reflected by the re-launch of numerous investment projects in the industry, whose implementation was suspended at the start of the economic crisis.

An example is Altayles, one of Russia’s leading wood enterprises. The company recently announced plans to build a large-scale plant to produce MDF, to be built in the Altai Krai, one of the largest regions in Russian Siberia, bordering Kazakhstan. The capacity of the plant will exceed 200,000m3 per year.

The company plans to produce high density panels, together with fine boards that will be specially designed for the Asian market. Investment in the project is estimated at six billion rubles (US$120m).

Similarly, Tomlesdrev, a well-known Russian timber producer, has just commissioned a plant for the production of particleboard in Tomsk, confirmed by recent statements of the press service of the Tomsk regional government.

Construction began in 2013 but was suspended indefinitely due to the economic crisis and the introduction of Western sanctions.

The design capacity of the plant is 350,000m3 annually, while the volume of investment in its construction amounted to 6.2bn rubles.