The French sawmill industry is enjoying buoyant market conditions, with both hardwood and softwood sectors, for differing reasons, experiencing robust demand at home and abroad. The consequences are some healthy bottom lines, but also rising prices for raw material and, in some sectors, tightening supply.
Putting the pressure on raw material provision, which is predominantly sourced from French forests, is that markets for it are not just growing but diversifying and multiplying.
The annual French timber harvest is around 38 million m3. That’s the same level as in 1985. However, the volume destined for sawmilling has been decreasing and now stands at around 19.3 million m3, with a rising proportion of that headed for export in the form of hardwood logs. At the same time, consumption of oak in the French barrel stave sector has been hitting new heights, while 8 million m3 of softwood logs are now destined for the energy sector.
As a result, French sawn hardwood production today stands at 608,000m3 of oak, 364,000m3 of beech and 248,000m3 of poplar (these three species now account for the bulk of sawn output, with other native species largely ignored).
Meanwhile, however, French sawn softwood production has been increasing. This is largely thanks to the soaring harvest of Douglas fir, a species that was widely introduced into France after the second world war and of which it is now the biggest producer outside North America. So despite the level of French softwood now going to generate heat and electricity, sawn output has reached 6.4 million m3 and this, in turn, is helping fire a growing French engineered wood industry.
Hardwood Market Trends
The sector under most pressure, both in terms of meeting vibrant demand at home and abroad and sourcing enough raw material at the right price, is oak sawmilling.
The chief concern of companies for several years has been the level of log exports, notably to China. As French Timber highlighted at the European Oak Conference, organised by the UK Timber Trade Federation in London in March, the rise in Chinese consumption has been considerable. In 2007 it accounted for 7% of France’s oak harvest. Last year that figure had risen to 23%. So alarmed have sawmillers been that they have held protests in Paris, calling for the government to introduce controls to safeguard their raw material supply.
Due to the severity of the situation in 2016, the French national sawmill federation and the French National forest office did act, devising a “transformed in Europe” sale system for logs from the public forest, reserving a proportion of the harvest to European sawmills.
This regulation initially had an impact, reducing log exports from 350,000m3 to 260,000m3. However, due to a lack of a wider control, the figure rose once more to around 350,000m3 last year.
Facing the closure of sawmills and further protests, warned their industry federation, the authorities have now extended the transformed in Europe system to some private forest sales and further state forest categories.
This may curb export levels for a while, but prices for logs are unlikely to decrease due to the level of worldwide demand and reduced availability in the forest. And without stronger regulation backing the French oak industry’s access to raw material, it is expected to remain at the mercy of global demand, which looks set only to rise. Recently, Chinese oak purchases dipped.
This, it is thought, is due to over-stocking in late 2017/early 2018 and a downturn in demand for Chinese oak flooring. However, this is expected to be a temporary hiatus and their log demand is expected to pick up again before the end of the year as they work through stocks.
Adding to the pressure, Vietnam is also becoming an increasingly significant market for French logs and at home, as mentioned above, French sawmillers have faced added competition from the domestic wine and barrel industry. The latter typically consumes boule grade lumber, putting particular raw material price pressure on this material.
Due to the combination of factors, French oak mills have increasingly been refusing to accept new customers in order to service long-established clients with the raw material they can obtain. And with reports of further log price rises of up to 20% in latest sales, this tendency looks set to continue.
The good news from the oak sawmillers’ perspective, is that their lumber exports have also been on the rise. In fact, they hit record levels in 2017 thanks to high levels of demand from European neighbours with their resurgent construction, flooring and furniture sectors, and continued strong buying from China and Vietnam. Sales to Indonesia have also been on the rise, albeit from a low base.
The UK still remains France’s biggest oak export market by some margin, with purchases last year of 45,961m3, but this represents contraction of 2.7% and in the first three months of 2018 they fell another 12% to 11,115m3. This seems at least partly due to over-stocking in 2017, with exports to China and Vietnam dipping in the first quarter for similar reasons.
French beech sawmilling has also been affected by an export ‘log drain’, but it too has seen strengthening demand for its lumber at home and abroad. And exports have been much less volatile than those for oak. Last year they rose a further 7%, particularly thanks to high demand from Spain, China and Vietnam.
In the first quarter of 2018, beech exports actually declined 20%, with all major markets bar Algeria and Belgium contracting. But this again seems due to over-stocking in the second half of 2017 and does not appear to have unduly perturbed mills. The underlying trend in global beech demand is still upward, notably in Asia, and, with French mills also cultivating new markets, such as India and Mexico, the future looks promising.
Softwood Self Sufficiency
France has always been categorized as a net softwood importer, with domestic production historically falling 2 million m3 short of consumption. But in the international downturn between 2011 and 2017, due to contraction in domestic demand France increased its exports from 350,000m3 to 750,000m3. Key destinations for French softwood have been Belgium and Spain, but North Africa is also a ‘traditional’ destination.
That export figure has since come down, however, as the French economy continues to recover and the construction sector returns to growth – reinforcing the message that French softwood mills only turn to export sales when the home market is depressed. Softwood exports fell 3.5% last year and a further 5.5% in the first quarter of 2018.
Going forward, however, despite the rise in consumption in the domestic market, the country looks set to become increasingly self-sufficient in softwood and require fewer imports than it has previously. That is down to the rise in the Douglas fir harvest.
Between 2011 and 2015, French Douglas fir sawn production rose 21% and it grew a further 5.5% in 2016 to reach 949,000m3. That is still some way behind spruce output at 3.55 million m3 and maritime pine at 1.25 million m3, but the harvest is set to continue to grow for years to come.
The maritime pine harvest, meanwhile, is still recovering from the devastating storms that hit south-west France in 2009, and last year log prices rose 40%, with most sawmillers struggling for supply in all grades.
But overall the mood in French softwood is reported as upbeat. Demand continues to climb and is thought to have improved still further recently by long-time French market supplier Germany selling more lumber to the US, so reducing competition for French sawmillers in their home market. And, clearly buoyed by the overall upward trend in consumption, the latter subsequently increased their prices on January 1 and again in June.
Further underpinning confidence in the French softwood sector, and to some degree hardwood too, is the increasing use of timber in French construction, notably in the form of wood-based building. This is partly down to architects’ desire to build leaner, greener, more energy efficient housing. Government too has got behind the trend as part of strategies to meet carbon targets. Building regulations lean towards use of ‘biosourced’ material and a voluntary government code, e+c-, encourages construction companies to go for high energy performance, low carbon impact building models.
Government Backing
In addition the government backed Adivbois programme (see p23) is in the process of developing a network of medium- to high-rise timber buildings around the country to act as inspiration for designers, developers and planners.
The timber industry is in part responding to this trend, but also helping advance it by growing and developing its engineered wood product capacity and expertise. Glulam output is on the rise and now the country is developing a significant CLT capability too, a field where France has been seen as lagging behind central European and Nordic countries. Spruce and pine are key raw materials here, but France’s Douglas fir resource is seen as giving its CLT sector a particular advantage and point of difference.
Timber building is now reported to have 9.1% of France’s single dwelling market and a 28% share of extensions and elevations, with use of wood in multi-family housing rising 72% between 2014 and 2016.