France: Beech in the red, oak on the decrease
Is the hardwood market yet another victim of the overall economic sluggishness? One may wonder in the light of hardwood sales figures in France. Now that the first half of 2012 is almost over, most sales results are far from impressive. There has been a marked rise in unsold rates over a year (over 30% of the auctioned volumes), whereas buyers, offers, and prices are on the decrease. For buyers and sellers alike, this is not exactly cheerful news.
There is concern about beech. Whilst the demand for pulp logs and wood for energy generation is still satisfactory in certain regions, the sawlog market is plummeting. Certain tenders held in the east of France (such as the National Forest Office’s – the ONF – sale in Saint-Memmie, on 15 May 2012) have even had a virtual 100% unsold rate for the 1m3 and bigger logs lot. In the region of Franche-Comté, where sales of timber are considerable (about ten sales this spring for 50,000 m3 on offer), the price of beech sold at roadside averages out at EUR 47/m3, which amounts to a drop of 18% since November 2011.
Ash, on the other hand, has experienced some contrasting trends. Very few regions have had stable prices, or even price increases, over a year. This is true about the ONF’s sale in Les Mazures, in the Ardennes department (24 May 2012). But in most cases prices appear to have dropped around 15% over a year, to EUR 70-85/m3 for sawlogs at roadside. However, despite this downward trend, ash is still in reasonable demand, even though Ikea has lowered its purchase volume and exports to China are going down.
That country is the subject of much discussion within the oak community. Over the last two years, European oak logs exports to Asia have helped maintain prices at the correct level, more particularly in France. Class C logs sent to China (approximately 200,000 m3 from France) have played a large part in offsetting the steep decline in European demand for strip flooring (36% drop in European production over 2008 and 2009). But the effects of the crisis in the US and in Europe are also felt in China, whose wood floors have a market share of at least 30% in Europe alone.
“Things are getting worse for Chinese who export oak flooring to Europe.” A French trader based in Shanghai explains that the domestic market is still active, but only for tropical species. Moreover, labour costs in China keep climbing. Besides, the government has just cut export subsidies, which has resulted in an automatic 15% price increase for export products. Finally, over the first four months of 2012, freight charges from Europe to China have gone up from USD 850 to USD 1,300 per container. “This is why I have cut down my French oak exports to China by 50%, while providing better quality products than these last few years.” Under these circumstances, it is no wonder that roadside sales of oak have dropped in France by about 15% since November 2011.