EU bans pulp shipments from Russia

MOSCOW. Oct 10 (Interfax) – The European Union’s eighth sanctions package that came into effect last Friday has expanded the list of products of the Russian timber-processing sector prohibited for import into Europe to include pulp and certain types of paper and cardboard.

Following the start of the fifth sanctions package, the main for the industry – which came into force on July 10 and applies to such sensitive product categories for Russian manufacturers as wood, plywood, boards, and pellets, meaning all products under the Trade Import and Export Classification (TRIEC) code 44 – timber processors had continued to supply to the EU with certain types of pulp and paper products, but now for a number of positions, although not for all, this will not be possible. Industry participants say that the new ban will not seriously affect their business, since it is not comparable to the previously introduced bans, but among those who can feel the effect of the eighth package will be the owners of pulp and paper mills in Russia’s northwest region.

"This [eighth sanctions package] will affect APPM [Arkhangelsk Pulp and Paper Mill] and Ilim more, and will require a reorientation to new markets for them," Andrei Frolov, vice president of the Union of Timber Manufacturers and Timber Exporters of Russia, told Interfax, explaining that namely these two companies are the largest producers and exporters of pulp in Russia.

Ilim produced 2.16 million tonnes of pulp in 2021, as well as 1.05 million tonnes of packaging materials, 297,000 tonnes of white paper, and 282 million square meters of corrugated products. APPM produced 984,000 tonnes of pulp, 272,000 tonnes of commercial bleached pulp, 614,000 tonnes of commercial cardboard, and 58,000 tonnes of paper.

Frolov noted that the exports of APPM, owned by Austrian Pulp Mill Holding, were traditionally oriented to the West. Supplies of the largest producer of pulp and paper products in Russia, the Ilim group, which belonged to Switzerland’s Ilim SA as of the end of 2021, to a greater extent, as previously, went to China.

"Segezha has suffered more from the fifth package, with the additions of the seventh, since all kraft paper was included in it," Frolov said when commenting on the degree of effect of the eighth package on the only public company in the Russian timber industry. An industry source also told Interfax that there were no apparent risks for Segezha in the new sanctions.

"Historically, the main volume of supplies of our products has been oriented to China. The part of the products that have gone to the European market will now be reoriented to other directions," Ilim told Interfax.

APPM and Segezha have not commented on the consequences of the eighth sanctions package.