The challenge for French oak and other hardwood sawmillers over the last two years has been keeping up with orders. Demand from their domestic market and export customers hit the heights and companies’ are now faced with rebuilding diminished stocks.
Business has since cooled, but mills say they’re still busy and hitting their numbers. And underlining the continuing upbeat consensus, significant capital investment in the sector is under way.
“The last two years have been extraordinary, with annual growth of 30%,” said Marie-Thérèse Carrey of Saint-Lothainbased oak and beech specialist Eurochêne. “The first few months of 2023 saw a drop in sales of around 10%, but it looks as though we’re returning to a pre-Covid pace, which seems perfectly logical.”
The experience of Monniot of Brienne-le- Château was similar, reported export sales manager Guillaume Manière.
“The market was very demanding throughout 2021 and 2022 and we had a strong first quarter in 2023,” he said. “Since April this year we’ve seen a lower end slowdown, but overall business is still ok.”
Mathieu Berthe of Estissac-based Tarteret reports that UK sales started to dip in September last year in terms of volumes.
“But this was in comparison with 2021 into 2022 when they were exceptional, especially for beams and boules,” he said. “Growth in exports generally has slowed, but France remains a good market, notably for boules.”
His comments were echoed by Mr Manière.
“Although UK demand is down on 2022, all our products continue to sell well there, including boules, beams and sleepers,” he said. “Overall, the French market also remains good. Some markets, like flooring are down, but in others, such as barrel staves, demand is still strong.”
Such have been order levels at Ducerf of Vendenesse-Lès-Charolles over the last two years there have been times when it has prioritised its long-established customers, said import-export manager Florence Perrucaud.
“We can take on new customers, but given stock levels we have had to focus on taking care of loyal customers,” she said.
She agreed there had been some levelling of demand more recently.
“The UK has maybe slowed down a little for oak, due to less construction activity,” she said. “But, while this year some months have been average, others have been good and we are on budget. Slowdown has also been more in lower grades. Better qualities are still selling well.”
The task now, added Ms Perrucaud, was to return stocks to normal levels.
“Over the last two years, hardwood mills did perhaps sell too much of their stock,” she said. “To get back to normal levels in 27mm material the process will take a year, two years in 50mm.”
A supply issue faced by hardwood mills, she maintained, was that there is less quality coming out of the French forest. That, combined with high consumption in the barrels sector, is underpinning log prices.
In recent years exports of logs, notably oak, to China has created some raw material supply stress for the French industry and led to calls for some form of controls. A government response was to stipulate that a proportion of state forest logs must be further processed within the EU. It is unclear what impact this had, but recent easing of Chinese demand is attributed more to economic slowdown and mills expect this to be a temporary reprieve.
“Asian markets have suffered greatly from Covid and high freight costs,” said Ms Carrey. “China, with its zero-Covid policy, seems to be finding it harder to get going again. But it seems they are starting to buy new oak logs for the autumn.”
“They will increase buying again,” agreed Ms Perrucaud. “We also see the market changing, with Chinese importers buying to satisfy wood products demand in their domestic market rather than for manufacture of export goods.”
Mr Manière took a similar perspective.
“Log exports to China have reduced in the first half of 2023, but we expect them to bounce back in September,” he said. “And this will continue to be an issue as long as the EU does not put restrictions in place. [In addition] since Russia banned log exports in 2022, Europe and France in particular have become the main source of logs for Chinese sawmills.”
At the same time, he added, Monniot has continued to diversify its own export business and widen its geographic reach.
“While China has been quieter, for us, India and Vietnam have been active. Several new markets have also opened for us in eastern Europe. This is mostly due to the Ukraine situation, but we also see it as a longer term trend.”
At the beginning of 2022, France introduced its new RE2020 regulation as part of its strategy to decarbonise construction. This includes measures to increase use of bio-based materials in building, including timber. The consensus is that this will mainly benefit the softwood sector, but it’s seen as having potential to drive wood consumption overall.
“The drive for softwood in construction should promote wood use generally,” said Mr Manière.
Ms Perrucaud agreed.
“We’re seeing RE2020’s effects already, with some authorities prompted to go further and prohibit use of uPVC windows for instance,” she said. “We think it will benefit the whole wood sector.”
Another legislative development being monitored closely is the new EU Deforestation Regulation (EUDR). This aims to ensure no timber or wood products (plus a range of other ‘forest and eco-system risk commodities’) that are implicated in deforestation or forest degradation are placed on the EU market. It covers timber grown within the EU as well as imported and applies to EU exports too. And one element of the regulation creating particular concern in the sector is its stipulation that ‘first placers’ have to provide geolocation co-ordinates for the plot of land where timber originated.
Under the EUDR, supplier countries will also be benchmarked and rated as high, standard or low in terms of risk of commodity exploitation causing deforestation, with first placers applying risk mitigation accordingly.
The general view of hardwood mills is that it’s too early to say what the implications are for administrative and due diligence procedures. But Eurochêne remains confident of its sustainability credentials in the face of the new rules.
“We are PEFC certified, and as part of certification, have strengthened our traceability tools,” said Ms Carrey. “We also emphasise that we only buy logs in France from sustainably managed forests.”
Ms Perrucaud stressed Ducerf’s chain of custody processes too and also underlined that France would be rated low risk in terms of deforestation and felt this would minimise the impact of the EUDR. However, if implemented as they stand, compliance with its rules on geolocation information could be complex.
“This could cause issues particularly for laminated and finger-jointed products and other composite products, which might comprise hundreds of lamellas,” she said. “Providing co-ordinates for all these, if that’s what’s demanded, would be a very time consuming process.”
The EUDR aside, the consensus of French mills is that 2023 will be stable, but with sales below 2021-2022 levels and cost of living issues and the geopolitical situation resulting in something of a slowdown towards the year end
However, Ducerf is clearly optimistic about longer term prospects for the market and its sawmilling operations and Bois Profilé manufactured products business. Reflecting its confidence, following its €4.7m capital spend in 2022, it has launched a five-year €20m investment programme. This will include installation of a new moulder, refurbishment of a log elevator and a €1.3m spend on a new press at Bois Profilé. The latter will give the company greater flexibility and will handle its “future production of CLT”.
At its Bourgogne Bois Industrie operation it is also installing a production line for compressed logs for the wood energy market. The largest part of the overall investment will see construction of a new biomass plant at Vendenesse-lès-Charolles. This will generate 200% of the site’s energy needs, with half sold to the grid. Also in prospect is a 200kW solar power plant on the roof of a new warehouse, and an optimising edging and trimming line to supply material for fingerjointed products.
Meanwhile Eurochêne is working on “a project to generate electricity and increase drying capacity” and Monniot has invested in a new production line and building to optimise board sorting, trimming and stacking.
“This is enabling us to improve presentation and grading of boards, and increase efficiency of the process,” said Mr Manière. “The building is also covered with photovoltaic solar panels, which will produce part of our electricity needs, [the cost of] energy being one of the main challenges we are facing.”
Mills are also focused on new product development. Last year, thanks to purchasing of “exceptional logs”, Eurochêne created a Prestige product, boasting “XXL diameter and exceptional quality”.
Tarteret has started production of wide and long square-edged material for 27mm flooring, with boards up to 380mm wide and 4m long, while Ducerf has introduced Bard 107 Texture t&g interior cladding. The latter has a tactile ‘structured’ surface effect and is available in ash and poplar as well as oak, with lengths from 800mm to 2400mm, plus bespoke finger-jointed boards.
