After a buoyant period through 2021 into 2022, the wood sector in France faced challenging times and uncertainty in 2023.
Last year, the total log harvest declined slightly. Out of a total of 39 million m3 of harvested material, the volume of hardwood saw logs was 4.9 million m3, which was marginally down, while the volume of softwood logs was around the same level as 2022 at 14.7 million m3.
By species, oak logs represented the highest proportion of the total at 2.3 million m3, followed by poplar at 1.5 million m3 and beech at 900,000 m3.
In softwood, spruce remained by far the most abundant species, with a harvest of 7.3 million m3, followed by maritime pine at 3.2 million m3 and Douglas fir, 2.8 million m3.
Over the year, hardwood sawmills produced around 1.3 million m3 of lumber, comprising 80% oak, 25% beech and 17% poplar. Of total sawn softwood production, spruce accounted for around 57%, with maritime pine and Douglas fir around 17% each.
The French timber market reported 2023 as a year of transition. After all-time high sales in the immediate post-Covid period, the market was bound to slow down. For the hardwood sector the slowdown was less abrupt, with sales remaining level until the third trimester when the market started to slow. For the softwood sector the downturn was more brutal and happened earlier, after the first trimester, when sales slowed, and stock levels consequently rose. The rest of the year was characterised by fluctuation.
This period of slower sales allowed the sawmills to replenish stocks that were at an all-time low after the hectic period of 2021- 2022. Consequently, the price of premium logs remained unchanged, while second grade prices declined 5%.
One aggravating factor in an already slowing market was the sharp rise of consumer interest rates. House buyers were unable to secure loans from the banks, impacting the construction sector and all associated markets.
TOUGH TIMES FOR EXPORTS
It was also a tough year for French timber exports across most categories.
Softwood lumber exports dropped by more than 9% and, apart from a slight uptick in September, sales always stayed below 2022 levels.
The main export destinations remained the same, with Belgium, Spain and Netherlands to the fore, but most went into slowdown. However, there was some growth despite generally sluggish market conditions to Italy, Morocco and the UK.
Sales of French softwood lumber to the UK used to be between 6,000m3 to 9,000m3 a year, but that accelerated to 21,000m3 in 2020, and moved higher still in 2021. It will be interesting to see if we can continue gaining market share in the UK as the market situation stabilises.
For oak, the situation was worrying, especially during the first semester of 2023. Volumes were much lower than the previous year. In the second half, export sales regained momentum but remained under the previous year’s levels. For the year as a whole, total volumes of French oak lumber exports amounted to 196,900m3, a drop of more than 23% compared with 2022.
The UK is still our main customer for oak lumber, although after hitting a record high of more than 75,000m3 in 2022, volumes were down 13% last year at 66,000m3. With the exception of Thailand and Chile, all other export markets saw contraction.
However, bearing in mind 2021 and 2022 were record years, it is perhaps not overly concerning to see the figures drop back. Prices had got extremely high, causing importers to withdraw their orders and stocks to build up in some products.
In the beech market, the situation was quite good through the first trimester before turning down for the rest of the year. As a result, 2023 total exports were 8.5% below 2022 levels. Belgium remains our lead export market for beech lumber, despite a decline of 27% in 2023. Sales to China and Spain also slowed down considerably. French suppliers did, however, see demand grow from Algeria, Portugal, Tunisia and Vietnam and managed to gain market share. Beech exports to the UK tend to fluctuate between 300m3 and 1,000m3 a year.
Other Asian markets for French hardwood went through a particularly difficult phase, with high inventory levels, resulting in very slow sales and a drastic reduction of imports – logs as well as sawn lumber.
Oak log exports to China reduced by 45% last year after hitting a record level of 550,000m3 the previous year. Softwood log exports were also down by 43%, while beech log exports declined by 23%. This drop in demand, however, is a breath of fresh air for some sawmills, who faced difficulty purchasing saw logs in the previous years. In some regions, the situation had become very concerning, with a more and more important part of the log harvest shipped abroad significantly impacting raw material availability for French producers.
The outlook for the rest of 2024 is rather uncertain. A lot will depend on the capacity of the construction industry to regain momentum. The figures that we have for the year already show some improvement in the softwood sector, whereas hardwood sales continued to slow through the first trimester.
Talking with producers at the Carrefour International du Bois exhibition in Nantes in May, however, most of them reported the situation was getting better, with sales picking up and more enquiries (see pp23-26).
The furniture and doors sectors seem to be the first to get back to growth, although the flooring market remains rather slow. Interest rates are also getting lower, and the construction industry is starting to show some positive signs.
The price of logs remained around the same, despite market slow down, with the situation attributed to the strong rise in production costs, with electricity, labour and insurance all on the up. At the same time, wood chip and sawdust markets have turned down, with the result being squeezed sawmill margins. And it looks highly unlikely that sawn lumber prices will drop in the coming months.
Also, this year the harvesting conditions have been very difficult due to poor weather resulting in fewer logs reaching sawmills. That has further underpinned high prices.
Factors that could have positive impacts include the implementation of new legislation, notably the RE2020 environmental regulation, which is designed to increase use of ecofriendly building products in new public construction. Wood products in general are set to benefit from such measures, especially for lumber for timber frame, CLT and glulam.
The belief is that the market will pick up further this year, however, it seems unlikely it will reach the levels of the previous years.
During the Covid years, many sawmills also took the opportunity to invest in CLT, glulam or pellet production technology in order to supply growing demand for these products. This year, investment continues, but at a slower pace due to a less dynamic market.
This year will also see implementation of the EU Deforestation Regulation (EUDR). French sawmills are having to ensure they comply with all its requirements and are able to supply all the necessary documentation to their customers.
So, even if some uncertainty remains, prospects for the year are reasonably good. Most producers say they are already noticing some positive signs and are optimistic. Looking forward, as our French Timber members know, it is important for the timber sector to diversify its customer base and have reliable partners in key export markets to ensure volumes when the local and European markets are not going well.
This has been the business model of most hardwood sawmills for some time. Now, larger French softwood mills are also targeting export markets as part as their long-term strategy. And, as one of our main commercial partners, the UK should be a more significant target for softwood exports.
That will be one of our goals for the years ahead – developing more partnerships in softwood between the UK and France.
