Summary
• US hardwood lumber exports to Europe fell 5.2% in 2011, but market share was stable.
• UK American hardwood imports rose by 27%.
• Spain’s five-year construction slump has seen US hardwood imports fall 75%.
• The EU Timber Regulation should not impact on US hardwoods.
• AHEC’s LCA study and Environmental Product Declarations will boost US hardwoods’ green appeal.

The euro crisis and generally sluggish economic conditions have made life challenging for US hardwood exporters to Europe over the past year and, according to the latest annual review from The American Hardwood Export Council (AHEC), 2012 is showing little sign of improvement. But there have been market bright spots, and longer-term the American hardwood sector’s environmental performance, now underlined by AHEC’s major life cycle analysis (LCA) project, and other factors are forecast to improve business prospects.

The review shows overall US hardwood lumber exports to Europe in 2011 declining 5.2% in volume to 411,000m³ and 2.8% in value to US$296.6m.

Sales to the UK, now America’s second biggest European hardwood destination, were actually up 27% to 70,500m³, giving them a significant increase in market share. AHEC attributed this to activity in shopfitting, joinery and hospitality sectors, which offset the weakness in new build, and also the US’s ability to supply the market quickly, when importers are increasingly reluctant to buy forward.

Germany also proved relatively buoyant, with US hardwood sales 13% ahead at 55,000m³. The construction industry showed improvement, with a pick-up particularly in repair, maintenance and improvement (RMI) work boosting demand for doors, flooring and furniture. Adding to the market impetus, furniture producers are also increasingly stressing ‘sustainable’ design, which seems to mean a preference for temperate hardwood.

“Encouraging signs of a return to growth” were also reported in Sweden, the Netherlands, Denmark, Estonia and Turkey.

These positives for US hardwoods, however, were offset by falling sales elsewhere. Exports to Poland fell 15.1%, hit by the weakness of the zloty, and to France where they fell by 22.5%. Demand in Ireland also slipped, albeit by just 1.5% to 10,300m³.

Euro crisis

The sharpest downturns, however, came in US sales to the most serious victims of the euro crisis: Italy and Greece. In the former, demand fell 7.3% to 131,000m³, with the impact of the recession compounded by “over-exuberant” US tulipwood buying in 2010, which led to over-stocking. The seriousness of the Greek recession was reflected in a 40% fall in US imports to 6,300m³.

Spain’s purchases were only 9.7% down to 31.2 million m³, but this followed a major decline since the peak year of 2007 when US imports were around four times greater. The collapse in construction is blamed.

In terms of US species, white oak remained Europe’s favourite, although import levels were roughly static at 176,000m³ thanks to gains in Sweden, Germany and the UK being offset by a decline in purchases by Italy, Portugal, Ireland and France.

The most dramatic swing came in tulipwood lumber. Despite demand upturns in some countries, overall European imports fell 27% to 78,100m³. Exports to Italy alone fell from 79,000m³ to 46,654m³, attributed to manufacturing downturn and earlier over-buying.

US ash fared better. European imports rose 25% to 47,800m³, thanks in part, it is reported, to furniture makers looking for a white oak alternative, and increased popularity of heat-treated ash for external use.

Meanwhile, Germany drove 39% growth in European demand for US walnut, accounting for 10,000m³ of the 26,000m³ import total.

There was, however, little sign of a return to fashion for US cherry, hard maple, or red alder and red oak slipped 5% to 14,100m³.

Despite the overall fall in US lumber suppliers’ 2011 European exports, however, they only saw a marginal market share fall to 18%, further evidence of the generally difficult market conditions.

The veneer sector also proved tough. Total US exports to Europe were down 5% in volume and 4.9% in value to 68.6 million m³ and US$102.3m respectively, with upturns to Portugal, Poland and the UK (ahead 14.2% at 4.2 million m³), cancelled out by falls to Germany, Spain, Italy and Belgium.

Market forecasts

Crunching a range of European economic forecasts for 2012, AHEC is not banking on any help from market conditions, with European-wide economic growth not anticipated to start picking up until June. There is expected to be some construction good news, with demand in the hardwood-favouring RMI sector expected to remain robust (and forecast to hit “record levels” by 2014), but 0.3% contraction is forecast in overall European new building activity, with growth only resuming next year.

There is also expected to be the added challenge for the Americans in the form of increased competition from European hardwood thanks to lower demand for the latter from China. “[Consequently] there is likely to be more domestic and east European oak lumber looking for a market,” said AHEC.

While it may be tough out there, however, the conclusion from the AHEC review is that, thanks to underlying consumer and market trends and their own initiatives, US suppliers will remain a pre-eminent force in the Europe hardwood market.

Among the positive indicators for the industry is the increased competitiveness of temperate hardwood-favouring European furniture and joinery makers against their Asian competition, which has been affected by exchange rates and rising costs. China’s European furniture exports, for example, fell by 14% last year.

Another point in America’s favour, says AHEC, given that it has oak’s largest global resource, is oak’s continuing dominance of the European market.

Tropical substitution

The fashion has been further strengthened by the shift from tropical species. This is explained by environmental concerns and destocking by European buyers, steering them to suppliers like the US which can offer short lead times and continuity.

Next year’s introduction of the anti-illegal logging EU Timber Regulation (EUTR), demanding EU importers risk assess suppliers for legality, is also seen as a potential plus. An AHEC-commissioned study by Seneca Creek has already proved there is a low risk of illegal material in the US supply chain and, longer term, it sees the EUTR enhancing timber’s eco reputation and competitiveness versus rival materials.

AHEC’s LCA, revealing US hardwoods’ cradle-to-grave environmental impacts and undertaken with sustainability consultancy PE International, is set to consolidate their green image (see p29). It will soon be incorporated in the international badge of eco approval – an ISO Environmental Product Declaration (EPD).

“The LCA project should mean American suppliers are better placed than most to satisfy growing demand for EPDs, driven by European commitment to green building,” said AHEC.