The pandemic has made for uncertain times and dramatically changing market conditions for the French timber sector. However, to the great surprise of many, the last 18 months turned out rather positively for French producers, although their raw material supply situation, with significantly rising log exports, has become increasingly difficult.
After the first Covid-19 curfew, from March to June 2020, the period of most disruption for the industry, companies started to get back properly to business, although most sawmills managed to keep some production going during all the stages of the pandemic. Meanwhile, people stranded at home had more free time and unspent cash to invest in home improvement, driving demand for all types of lumber, notably for flooring, outdoor and landscaping products, but also structural lumber and pallets.
Also, as most building sites had been closed in lockdown, the relaxation of restrictions saw a lot of catch-up from construction customers, eager to get the roofing lumber, glulam and structural timber needed to complete projects.
So sawmills found themselves in a race to keep supply up with demand, which is still on-going, with everything sold before it’s produced. Buyers continue to have trouble finding all the volumes they need, stocks are non-existent and prices rising very strongly.
Another important parameter impacting availability has been the timber harvest. It halted for several weeks at the beginning of the pandemic and, even though most French regions managed to get back to normal production quite quickly, it’s expected that the harvest totals will be slightly under previous levels.
LOG EXPORTS REACH NEW HEIGHTS
A challenging consequence of the return of dynamism to the global wood market is the increasingly severe shortage of raw material. Driven in particular by enormous demand from Chinese importers, who are servicing a thriving consumer market, timber is in tight supply worldwide and buyers are already anticipating the Russian softwood log export ban set for the start of 2022, and looking to other sources worldwide.
The situation in the French log market is described as extreme and most sawmills are struggling to find the quantities they require to meet customer demand.
The volume of French softwood logs imported by China rose by more than 50% in the first quarter of 2021 (215,000m3). Considering it had grown 83% in 2020 (reaching 565,000m3) that is genuinely concerning.
China’s imports of oak logs have also risen sharply – 46% up at 141,000m3 in the first quarter – and its appetite for French beech logs is also growing – up 55% at 50,500m3.
This boom in log shipments is creating a significant negative tension in the market and predictions are not overly optimistic. Some French sawmills are at risk of closing due to lack of raw material. In turn, there will inevitably be an impact for their export customers, including buyers in the UK who may find problems ensuring a stable supply of wood products.
To raise awareness on this subject of strategic importance for the entire European wood industry, the French Timber Federation (Fédération Nationale du Bois – www. fnbois.com) is working on legal solutions and lobbying. This includes a petition being distributed Europe-wide ‘I say stop to massive log exports’ (https://lnkd.in/dU4tvWt ). It describes European sawmilling as facing “mortal danger” from the “haemorrhage” of logs from the continent and appeals for support in its campaign to limit exports. It tells prospective signatories that it’s in their hands “to write the history of the end or rebirth of European wood processing”. So far over 9,000 people have signed.
RISING GLOBAL SOFTWOOD DEMAND
The increase in consumption in its domestic market, combined with the boom in demand from American and Chinese buyers caused the French timber sector to reach record sales levels this year. This was especially the case in softwood lumber, but the hardwood sector is also under pressure to meet high demand both in Europe and Asia.
Although most French softwood sawmills are focused on the domestic market, exports are also rising. Demand is high for Douglas fir in northern Europe and for pine in Spain.
Softwood lumber exports (mainly fir) to the UK, after rising 184.8% to 20,986m3 in 2020, increased 702.7% in the first quarter of 2021 over the same period the year before to hit 11,399m3.
The two main drivers of demand for the French softwood sector are the packaging and building industries. With the implementation of new regulation on building’s environmental performance, benefiting wooden construction (RE2020), the domestic market will remain strong in 2021 and prices are expected to rise due to competition for logs. It shouldn’t be surprising to see exports decrease in coming months as softwood mills, facing tight raw material supply, prioritise long-term customers.
OAK RECOVERY
Demand for French oak fell sharply from March to July 2020 due to the pandemic and lockdowns, before picking up, then accelerating from November.
As a result, total oak lumber exports were only down 7% last year.
European users were looking for high grade lumber and added-value products, such as solid wood or laminated products, as they could not get supplies from eastern Europe or Asia. This market remained strong for the rest of 2020. Prices have increased to cover additional shipping costs and rising log prices.
Oak lumber exports to the UK increased 1.7% last year, despite a couple of slow months in the initial lockdown. Impending Brexit might have encouraged UK distributors to increase their stock levels beforehand and demand was reported high for renovation and landscaping products.
Latest figures show a rise in total French oak lumber exports of more than 25% in the first quarter of 2021 to 56,110m3, with sales to the UK rising 38.8% to 13,821m3, consolidating the country’s status as France’s leading oak export market.
FRENCH PANDEMIC PERSPECTIVES
The past year has been exceptional for everyone, not least the French wood industry.
Adding to the difficulties caused by the lockdown and Covid-19 safe work practices, implementation of Brexit was another source of concern for many French timber suppliers; the UK being one of our main trading partners for several types of wood products, notably of course, oak. However, after the first few weeks of familiarising themselves with new post-Brexit UK import processes, feedback from sawmillers was rather comforting, with no major disruption reported. Thankfully, oak is not subject to any special procedure, and all actors in the supply chain are now familiar with new administrative processes.
For the rest of 2021 and 2022, French industry perspectives are encouraging. It is unlikely the timber market will stay at current high levels, and softwood prices are bound to decrease, following the trend of the US market, although the new average price should be higher than pre-Covid due to higher costs. However, we expect French and European markets to remain dynamic next year, with packaging and construction sectors driving demand for softwood lumber. Sawmills are also investing in more technical and engineered products for construction. The implementation of the new RE2020 regulations should massively boost use of wood and carbon neutral products in buildings. We expect to see a particular rise in demand for CLT and glulam, with new usage in high-rise construction expected to generate 400,000m3 of extra demand.
The log export situation remains an area of concern, as the ability of the French industry to benefit from buoyant market conditions depends on availability of raw material. If nothing is done, soon Europe will be one of the last places where there is no market restriction on log exports, jeopardising availability of wooden products needed to achieve carbon neutrality.
FRENCH TIMBER 2021
Despite the pandemic and cancellation of some events, national marketing body French Timber (www.frenchtimber.com), kept most of its operation running.
We’ve had an office in Shanghai for the last 10 years and attend the main trade shows, like Domotex and Interzum thanks to our local representatives. In 2021 we also plan to expand our activity in China with new promotional activity in different cities away from the mainstream. And we hope to bring members and sawmills to on-site physical events in the second half of 2021.
We also have a diversified programme of events in South-east Asia, Vietnam, the Middle East and Europe. Activity in Europe has, in fact, been increased in 2021 as it’s easier to organise trade missions here for the moment.
We also have a new social media focus, to reach potential customers never targeted before.
Our objective is to provide our members with opportunities in various markets to help diversify their customer base. Our role is also to keep them up to date with latest market information, so they can make the best strategic decisions for their companies.
