The French sawmill industry is primarily dependent on the domestic timber resource. The annual harvest is around 37.9 million m3, a stable figure for a number of years. Around 19.3 million m3 of this is destined for sawmilling, with the volume decreasing in recent years, whereas logs going for fuel have been on the rise, reaching 8.1 million m3 in 2016. About 54% of the total is certified.
Overall sawn hardwood output has been declining due to a combination of changes in forestry and raw material export, notably of oak. In 2016 output was 1.3 million m3, including 400,000m3 of oak lumber, 210,000 of oak barrel staves and sleepers, 400,000m3 of beech lumber and 200,000m3 of poplar.
Availability of oak in particular to sawmills has been falling, partly due to demand for logs from export markets, especially in Asia, but also to buoyant demand from barrel makers.
Other commercial domestic hardwoods include ash, which has been seeing increasing demand due to high oak prices, while cherry represents a small, niche business.
Hardwood trade balance
France’s hardwood trade balance remains positive across species. An estimated 50% of oak is exported, while the figure for beech is 80%.
It has, however, been a turbulent business.
The early part of 2018 was positive for the French oak sector. Demand throughout Europe rose, driven particularly by consumption, among others, in flooring, framing and furniture sectors. Extra- European exports were also healthy.
There was also strong demand from the wine sector. Besides staves for barrels, it has also been buying bigger dimensions for larger storage vessels. These are made from boule-grade lumber, pushing up prices for the material considerably.
Towards the end of the year, however, the market dipped.
Global economic uncertainty infected the international hardwood sector generally with greater caution and, after seeing export volumes rise sharply in the second half of 2017 and into 2018, demand steadily contracted.
Of the leading export markets, UK French oak demand for 2018 overall was down 4.2%, Belgian 8%, Netherlands 10.5% and Chinese 13.1%. Among the big importers, only Germany was in positive territory, up 4.7%.
The slowdown in Europe was seen as part of a wider economic malaise, and contraction in Chinese sales was also attributed to general slowdown.
Depressed conditions continued into the first quarter of 2019, with total French oak exports down 15.9% on the same period last year. Among the bright spots, however, was the UK, with imports up 5.8%, largely, it is thought, due to importers stocking up ahead of the then envisaged Brexit date of March 29.
Chinese oak log demand has been an issue for sawmills for a number of years. Towards the end of 2018, however, its imports fell. This was partly attributed to French government measures intended to curb raw material exports, with tougher phytosanitary rules making the process more complex and regulation stipulating that a set percentage of logs from French forests are processed in the EU. The main factor behind lower exports, however, was seen as lower Chinese economic growth, and the US-China trade war, which affected Chinese American hardwood imports and seems to have made buyers more hesitant generally.
Sawn oak exports to China were also depressed, notably for flooring.
Beech suppliers upbeat
French sawn beech producers are more buoyant, reporting rising sales volume and prices. Overall exports in 2018 were down 7.8%, which was attributed to over-stocking and a 35.4% slide in Chinese imports.
But the sector has since regained impetus as inventories in most buying countries have cleared. First quarter 2019 exports were up 10.9%, with a particular jump in sales to Belgium, up 116%. Chinese imports were ahead 13%
Prices for packaging grades have remained stable due to competition from softwood lumber from beetle- infested forests in central Europe. But superior grade prices have continued to rise and demand is reported to be continuing on an upward curve across Asia, in India and North America.
Softwood market trends
France has long been considered primarily a softwood importer, with rising domestic production still falling below consumption. But output has continued to grow, mainly thanks to its large and growing Douglas fir forests reaching maturity. This has helped offset reduction in supply of maritime pine, still experiencing fallout from forest damage wreaked by the great storm of 2009.
The French structural softwood market has remained robust. Most mills serving this sector have three to five-week order books and prices are stable. Some customers, such as glulam producers, are also willing to pay a premium for fresh, clean wood, typical of French production, rather than lumber from central Europe and Germany, which has a tendency to blue stain.
Softwood for packaging has felt feeling the ongoing effects of the 2009 storm on pine supply more than most, and prices for timber from regions of Europe suffering beetle damage put a further dampener on the market. However, producers are now reporting some market improvement.
Overall French softwood exports contracted 2% in 2018 due to strong domestic demand. However, more recently high prices in the US have been sucking in its wider European imports, underpinning demand, and French exports, primarily to the rest of Europe, rose 6% in 2019 quarter one. Sales to the Netherlands and Germany were particularly strong, up 45% and 54% respectively.
Lower prevailing prices in North America are now reported to be taking some momentum out of that market, with supplies of cheap, beetle-damaged lumber from Germany and Eastern Europe further devaluing trade. European mills, it seems, have pushed this material more to extra-European markets, in an attempt to underpin European prices.
Overall, however, for 2019, the outlook seems buoyant for French softwood producers, with their domestic and wider European construction customers, in particular, still showing signs of vitality.
French feelings on Brexit
The UK remains a key market for French hardwoods, particularly oak for flooring, joinery, interiors, sleepers and structural application. The main effect of uncertainty over Brexit so far seems to have been an increase in oak stocking in the early part of 2019, followed by an inevitable slowdown. If and when a Brexit deal is done, French mills expect a further dip in demand as new export procedures bed in and excess inventories are cleared. Beyond that, it is expected that UK imports will get back on track and the close cross-channel timber trade ties will continue.
UK imports of French softwood have been increasing, up 28.2% in 2018 and a further 11.7% in 2019 quarter one. But they remain at a relatively low level and, whatever deal is struck on Brexit, are not expected to be significantly impacted.
