Summary
• Exports of French oak reached 103,000m³ in the first seven months of 2011.
• The UK is the biggest export market for French oak.
• The French beech market is growing by 2% each year.
• There is a drive to export value added products, rather than unprocessed logs.
• Niche markets are being developed.
Despite the economic crisis in Europe and the problem of log exports outside of Europe, the French hardwood sector has been quite stable this year. Indeed, most hardwood sawmillers are confident that 2011 will show positive market results by the end of the year.
Export markets are gaining importance for the French sawmill industry: 2009 was the lowest year for exports of hardwood sawn timber with volumes falling to 145,000m³ for oak and 128,000m³ for beech. In 2010, with a lower-valued euro and the positive impact of economic stimulus packages in many countries, exports of French oak increased by 30%, reaching a record volume of 186,000m³. The beech market also increased to reach 140,000m³ in 2010.
The first seven months of 2011 saw positive export figures with volumes of oak reaching 103,000m³, on the same trend as 2010. The UK has become the major export market for French oak (with 23,000m³), followed by Belgium, Germany and China. Europe accounted for 75% of French exports while China is the fastest growing importing country with almost 9% market share compared to less than 2% in 2007.
The beech market has been growing by an average of 2% per year since 2005. However, lumber prices are still very low and log prices are following the same trend. Beech has become a commodity and industrial wood subject to availability or the price of alternative species such as rubberwood, red oak and so on.
Oak remains the main hardwood species, not only in Europe but also in Asia. The trend has been continuing for the last five years and we don’t forecast any change as it is the most available hardwood specie in Europe and the US. The market for beech will continue to grow, thanks to its very affordable price and ready availability.
The main competition for European oak is American white oak. In 2010, French sawmillers enjoyed both a cheaper euro and the reduced availability of American oak. The situation became tougher at the beginning of 2011 when the euro was high and US sawmills started to ship large quantities of hardwood to Asia, driving the price down every month in a bid to reduce the stock in the US. Having said that, the impact has been lessened thanks to internal demand, which has kept the market steady.
Meanwhile, one of the main competitors for beech is American red oak, the price of which has been decreasing so fast and to such a low level that we don’t foresee any more decreases in the future.
The trend of the euro against the US dollar in the coming months should help the European hardwood exporters to regain some market share.
Log exports: a European challenge
In September, during the European Hardwood Conference held in Brasov, Romania under the European Sawmill Association umbrella, European hardwood sawmillers issued a common statement asking the European Union to protect Europe from log exports to Asia.
Log exports have become a major concern in all countries, damaging the European wood sector, driving log prices to levels where the profitability of sawmills cannot be sustained.
Many countries, including Russia, China and African countries, are issuing regulations to protect their natural resources from being exported without any local processing and value adding. It has been calculated that every cubic metre of logs leaving Europe leads to a loss of €45 in terms of taxes, jobs and investment. Meanwhile some log importing Asian countries benefit from lower taxes, labour costs, electricity costs and tax rebates to develop their own industry. It is therefore in the interests of European countries to either protect the European wood industry or to tax the export of raw material so as not to impact our economy.
In the second half of 2011 log exports to Asia reduced significantly due to reduced international trade and lower consumption of finished wood products in Europe and America.
While Asia’s demand is still driven by price sensitive factors, we notice that the increased use of modern woodworking machinery is also driving up the demand for dimensioned and ready-to-use products, allowing better margins and value for the French sawmill industry.
In Europe, niche markets are being developed to push the use of continental hardwood instead of tropical timber. Market share is being gained especially on oak decking for outdoor use, as well as thermo treated hardwoods (including oak, ash, poplar and beech) for both cladding and decking.
At the same time, due to environmental concerns, local hardwoods are regaining share in traditional sectors such as stair and window manufacture. The fact the most of the sawmills are able to deliver PEFC certified timber certainly helps.
EU FLEGT regulation will not impact the French sawmill industry very much and should create some new opportunities. The main challenge facing the industry and creating unfair competition is the issue of FSC versus PEFC. Both certification schemes are aiming toward the same goal of sustainability in the wood sector, but pressure has been put on distributors to select one scheme over the other, thus closing entire market opportunities for forest owners and wood processers belonging to the other scheme.
Since the European Softwood Conference in October the European Timber Trade Federation along with the whole European sawmill industry has been asking that both systems work toward a mutual recognition so that market access can be guaranteed for all wood products coming from sustainably managed forests.