Chinese raise wood and pellet prices, sawmills complain about export ban

SARAJEVO, (Patria) - While most welcome the decision of the Council of Ministers of BiH to ban the export of pellets and wood assortments from BiH due to the surge in heating fuel prices, the Employers' Union of Republika Srpska complains. They believe that this can cause a huge problem for domestic briquette and pellet producers who have contractual obligations and will suffer serious consequences due to this decision. On the other hand, there is information that the problem is that enrichment will slow down because there will be no cash with which foreigners pay for wood from BiH.

"The pellet production market in Republika Srpska is not large enough considering the capacities, and in case the decision is implemented, some pellet producers will face an additional problem due to the large number of employed workers and transport vehicles, and transporters would also suffer damage. Also, briquettes are hardly sold on the domestic market at all, and if the export ban is implemented, a lot of capacity will be needed for their storage," stated the Employers' Union of Republika Srpska.

They are asking the Council of Ministers of BiH to amend the aforementioned decision by introducing export restrictions so that employers can still fulfill their contractual obligations from the previous period.

"This could be done, for example, by allowing each exporter of pellets or briquettes in the current year to export the same quantity of products they exported in the previous year, as this would ensure enough goods for the domestic market as well," stated the Employers' Union of Republika Srpska.

Market and cash flow analyses show a different picture. Before the ban on the export of roundwood, adopted two days ago by the Council of Ministers of BiH, wood exports from Bosnia and Herzegovina were constantly growing, especially to China, which, according to well-informed sources, "does not ask about the price" both in our country and around the world.

According to data from the Indirect Taxation Authority of BiH, the value of wood exported to China in the first five months of this year amounted to 19.1 million KM, while in the same period last year, this export was "only" 8.2 million KM. Throughout 2021, wood worth 26.6 million KM was exported from Bosnia and Herzegovina to China, which is twice as much compared to 2019.

At the same time, in addition to the significant increase in exports, data from the ITA BiH also indicate an increase in the number of exporters to China. In the first months of last year, 14 companies exported wood to China, while in the first three months of this year, there were 26 exporters.

The media recently reported that Chinese citizens have been visiting sawmills in Bosnia and Herzegovina lately and mostly buying oak logs, for which they pay between 600 and 900 KM per cubic meter, while the average price of oak charged by Šume Srpske is around 230 KM per cubic meter.

”The Chinese are there on the ground, bringing bags of cash and buying logs, putting them in containers and taking them to China. The prices are unrealistic because they have large subsidies from their government and are seriously undermining our competitiveness. What is worst, they are taking away our raw materials, so our wood processing factories do not have sufficient quantities, and we cannot prevent it,” said Darko Partalo, owner of the company Drvoprodex, recently to capital.ba.

In the last few months, wood processors have been demanding from the authorities to ban the export of roundwood, precisely because they do not have enough raw materials for processing and employing domestic capacities. After several attempts, the Council of Ministers of BiH adopted a decision banning the export of roundwood, firewood, and pellets.