We are 45 days away from the implementation of the announced Russian log Export Tax, an 80% duty that was to be levied on every log shippped out of Russia after January 1, 2009.  The concept was to keep logs, a natural  raw material resource, at home to help build Russia's own finished furniture and flooring industries.  Until now this natural resource was being shipped out of the country, mainly to China, as fast as the loggers could cut.

Enter the global economy and all of a sudden Russia is seeing a major decline in the value of the logs and orders from other countries wanting the material.  Russian log prices hit their all time high in the 4th quarter of 2007 as manufacturers clambered to build inventories before the new taxes started to go into effect.  Since then the decrease in global demand and the threat of the 80% duty have combined to decrease demand and prices to their lowest point in years.  The hoped for development of Russian wood manufacturing industry has been slow and is not ready to use those logs that are available.

Good news?  The Russian government has agreed to delay the Export Tax for at least nine to twelve months.  This leaves the world's largest exporter of logs, still available to supply logs without a restrictive export duty.  But, be careful what you wish for....  With the threat of the Russina duty looming, most countries have found new resources for their log supplies.  Scandanavia has replaced Russia with other Baltic Sea countries who are anxious to export.  So now Russia is left with the decreased demand they had hoped for but it is combined with low prices on exported product, fewer potential customers and a domestic manufacturering industry that is not yet ready to take advantage of their governments grand plan. 

Bottom line, Don't fool with Mother Nature or a Free Market Economy.