Investment opportunities in the timber industry in 2024

On the issues of investment in the timber industry in 2024, market players continue the discussion: some refer to the instability of the situation and the current rate of the Central Bank, others still see investment prospects in the modern timber industry. Forest Complex magazine published an article about investment opportunities in LPK with comments from the President of the Russian Timber Association Olga Kalyuzhnaya. In our material, we have collected the main points that highlight the attractiveness of further investment in forest industry projects.

  • The timber industry products market is cyclical, like any sales market: every 3–5 years, experts record its ups and downs. In the current situation, when sanctions pressure imposes restrictions on the economy, new opportunities are opening up: choosing alternative logistics routes, stimulating demand in the domestic market. Investments in projects already launched before 2022 have a significant impact on current investment activity. Any company needs supporting capital expenditures (CAPEX): enterprises ensure the operation of current production, carry out repairs, re-equipment and refurbishment - this is also an investment activity.
  • In a cyclical market, we should not forget about measures to support the industry. One of these measures developed by regulators in dialogue with business was transport subsidies. In 2024, it is necessary to preserve them, as well as attract large cargo carriers to operate along the routes passing through the ports of the North-West and the Far East. Businesses also require support in concluding intergovernmental agreements. In addition, companies need new financial routes and infrastructure financial solutions for international settlements.
  • It is also important to continue to stimulate the consumption of forestry products in the domestic market. In 2023, positive dynamics were recorded: 5–7 years ago, the capacity of the domestic market for lumber consumption was estimated at 10–12 million m3, and now this figure is 16–17 million m3. Demand for lumber drives growth in the housing construction market. In 2023, 110 million m2 of housing were built, more than half of this volume is individual housing construction. The growing demand for the construction of houses using frame technology, where a large volume of lumber is used, has a positive effect on demand in the domestic market.
  • To maintain the rate of consumption at the level of 2023 and increase it, government support measures are required:

    — preferential mortgage lending programs;
    — a separate program for preferential mortgages for individual housing construction with lower rates;
    — programs to support low-rise residential wooden construction.

  • Among the most promising areas for investment in the timber industry are projects aimed at producing in Russia those products that were previously imported (for example, certain types of paper and cardboard, certain types of wood panels or construction materials). The scenario of maintaining investment volume at the level of 2023 looks realistic.