Segezha lumber deliveries to Egypt virtually cease due to payment problems

VOLOGDA. Dec 7 (Interfax) - Segezha Group has minimized its lumber shipments to Egypt, which was the company's second export market in value terms in 2021, and practically stopped them in October 2022.

Segezha Group Vice President for State Programs, Sustainable Development and Forest Policy Nikolay Ivanov told Interfax that the company shipped its last two vessels with products to Egypt in October. A total of five ships were sent this year, whereas previously, Segezha would dispatch this number of vessels every month. "That is a 7-10-fold drop in [volume - IF] terms," he said.

Segezha exported 6.5 billion rubles worth of products to Egypt in 2021, which amounted to 7% of the company's revenue last year (second place in volume of supplies after China, where exports amounted to 11.5 billion rubles, about 12% of revenue).

The decline in exports to Egypt this year was caused by problems with payment for delivered products due to the specifics of currency regulation, exacerbated by the oversaturation of the market with similar products from other countries, Ivanov said.

He explained that Egyptian currency legislation imposes restrictions on settlements in dollars and euros, while there are no mechanisms to use in settlements the money that enters the Egyptian market with the flow of Russian tourists and from other sources.

"Another problem is that a lot of lumber was dumped in the Egyptian market, because Europe also has a very bad market, and they are really dumping, selling at prices 20-30% lower than Russian lumber, because they cannot sell to their [consumers - IF]. This is true for Finland, Sweden, and Germany. And there prices have fallen to multi-year lows," Ivanov said.

Russian Export Center representative Andrei Mironov, head of the REC office in St. Petersburg, confirmed the continuing problem with payment for Russian products by Egyptian consumers. Egyptian banks are now trying to find a solution with the local Central Bank to carry out settlements through letters of credit or other instruments, he said.