It’s a sign of the international market times that Chinese buyers have been looking for alternatives to French oak logs recently. A few years back the volume going to China was causing French sawmills serious concern, but now it’s all change. New phytosanitary rules and stipulations on cutting a proportion of logs from French state forests in the EU have helped curb the trade, but the key reason Chinese buyers are now looking elsewhere is that prices have risen to €315/m3 CIF in Shanghai. One factor behind this is rising freight costs, but the main reason is a combination of growing French domestic consumption, particularly in the increasingly upbeat construction sector, plus rising demand in other export markets, including elsewhere in Europe.
In fact the French timber sector across the board, both hardwood and softwood, has been experiencing improving market conditions.
Overall hardwood lumber output was up last year, with oak rising fastest, up by about 10% to 600,000m3, while beech came next, increasing 8% to 360,000m3.
While production rose however, demand rose faster, with export growth also led by oak, up 13% by value over the last 12 months. The consequence has been growing price inflation in most species, as increased consumption has combined with national forests reaching their harvest limits and private owners showing reluctance, until recently, to release more log volumes. Interestingly, the combination of market factors has led to Chinese buyers becoming less raw materials competitors for France’s mills and more customers, with their French sawn oak imports up 65% last year.
Such is demand in Europe and Asia, French mills have been increasingly delving into inventories. Customers have also pressed them to release more green timber to speed up delivery, although with limited success. So far buyers have been willing to pay higher prices, but oak mills are reported to be wary about pushing them too far and losing sales to alternative species and materials, notably in the flooring and interior joinery sector.
Demand for French beech has also been growing in domestic and hardwood markets and mills report dwindling supplies in the most popular A and B grade lumber.
Besides growing wood consumption generally, French beech lumber demand has also been pushed up by the rising prices of its main competitors, American red oak and rubber wood lumber. Exports have increased 5% this year, with sales to China and Spain leading the way, up 67% and 11% respectively.
So far French softwood output and demand have been balanced, with lumber production rising over the last year to 6.25 million m3. Consequently prices have been stable and forecasts are that they may even dip in the short term.
Whether this will remain the case remains to be seen, as recent growth in French construction has picked up again since the election. Building permits are on the rise and demand for multiple-occupancy residential building is particularly strong.
A warm winter depressed French softwood fuel product demand, and wood pallet manufacturers report tough competition from competitors using alternative materials.
However, the increasingly strong wider economy has boosted other packaging lumber sales and French softwood exports, mainly to the rest of Europe and North Africa, hit a record high last year of nearly 1 million m3. Overseas sales are expected to be lower this year, but that is due to increasingly buoyant domestic demand.
