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Report from
Europe
Emerging signs of recovery in the EU joinery sector
The European construction and joinery sectors continue to
recover slowly. The rate of recovery in the UK, which was
rapid in 2014, weakened again in the first quarter of 2015.
However there is confidence that the UK market will pick
up again over the summer months.
The large German market remains stable with good
consumption. There is improving activity in the
Netherlands, Poland, Spain and Belgium. The Italian and
French construction markets are still weak and declining
but there are signs of improving economic conditions in
both countries.
Imports of finished joinery products from outside the EU
increased slightly in 2014, but the weak euro is acting as a
drag on imports in 2015.
Total GDP across the EU expanded by 0.4% in the first
quarter of 2015, the same rate of growth as in the previous
quarter. Growth in the UK and Germany slowed in the
first quarter of 2015. However growth in France, Italy and
Spain was stronger than anticipated.
Overall the data suggests that economic recovery is
becoming more resilient and widespread across Europe.
Economic Sentiment in the EU was falling in the second
half of 2014 but has been improving again in 2015.
Overall economic sentiment has improved significantly in
Spain and Italy this year, although this has yet to filter
through into a significant increase in construction activity.
(Chart 1).
After a brief surge in the number of building permits
issued across the EU in the first quarter of 2014, these
declined again in the second half of the year. This was
mainly due to a sharp rise and fall in building permits
issued in the UK during 2014 (Chart 2).
EU construction forecast to remain flat in 2015
The independent research organisation ¡°Arch-vision¡±
estimates that total EU construction value may have
declined 1% from around €830 billion in 2013 to €820
billion in 2014.
Construction value is expected to remain level at around
€820 billion this year before rising 1% to €830 billion in
2016.
These forecasts draw on the latest European Architects
Barometer (EAB) survey of 1,600 architects undertaken
by Arch-Vision in eight European countries for the first
quarter of 2015 combined with analysis of other European
construction industry data (Chart 3).
More detailed consideration of construction sector activity
at the national level is provided below.
United Kingdom: the construction market continues to
improve in 2015 but at a slightly slower pace than in 2014.
According to Eurostat, construction confidence in the UK
fell in the first 3 months of the year, but increased sharply
in April.
Most construction companies expect continuing growth in
the market in 2015. Arch-Vision‟s survey in the first
quarter of 2015 indicates most architects have good order
books and expect rising turnover for the rest of the year.
Arch-vision‟s forecasts are more conservative than those
of the UK Construction Products Association which
forecasts that construction output may increase by as much
as 5.5% in 2015.
Germany: most construction market indicators remain
positive. Building permits are high and stable. Arch-
Vision‟s survey suggests that architect‟s order book and
turnover development were positive in the first quarter of
2015. The Eurostat construction confidence indicator is
higher than in most other EU countries.
However it is still negative ¨C indicating that German
construction companies remain cautious about the future.
Arch-Vision expects 1% growth in German construction
value in 2015 followed by 2% growth in 2016.
France: although the French economy improved
significantly in the first quarter of 2015, the construction
sector is not yet showing any improvement. Construction
confidence remains very low.
The Arch-vision survey indicates that French architects
order books continue to decline. Arch-Vision predicts that
French construction value will decrease 3% in 2015 and a
further 1% in 2016.
Spain: after several years of serious depression in the
Spanish construction sector, there was a significant rise in
both confidence and production last year. However this
trend has levelled off in 2015. Building permits also
remain at historically very low levels.
The results of the Arch-vision survey are equally mixed.
Spanish architects continued to report improving order
books in the first quarter of 2015. But they also reported
an increase in the number of cancelled or postponed
projects. Arch-Vision concludes that overall construction
value will remain flat at historically low levels in 2015,
before rising 1% in 2016 and 2% in 2017.
Italy: the construction sector is still in deep recession.
Construction production value remains static at only
around two thirds the level of 2010. Construction
confidence has improved a little in 2015 but remains deep
in negative territory.
The Arch-vision survey indicates that architects order
books and turnover development continued to decline in
the first quarter of 2015. Arch-Vision predicts that Italian
construction value will fall 4% in 2015 with further falls
of 2% in 2016 and 1% in 2017.
Netherlands: the construction market is showing signs of
significant improvement. The Arch-vision survey indicates
that architects order books and turnover were improving
throughout 2014. This positive trend strengthened in the
first quarter of 2015.
The Eurostat confidence indicator and the number of
building permits has increased sharply since the start of
2014. The construction production index has been rising
gradually over the same period. Arch-Vision forecasts
construction value will increase 2% in 2015, with growth
rising to 3% in 2016 and 4% in 2017.
European joinery product import trends
With the exception of flooring products, imports
contribute only a small proportion of total EU
consumption of joinery products. In terms of value, only
around 4.5% of doors and glulam, and around 0.5% of
wood windows installed in the EU are imported from
outside the region.
This is indicative of the very strong commercial benefits
from proximity to the consumer in the joinery sector and
the essential need for detailed knowledge of national
construction markets. The EU imported wooden doors
with total value of €285.3 million in 2014, 3.8% more than
the previous year. The value of wooden door imports from
China, the largest non-EU supplier, increased 13.7% to
€100.7 million in 2014.
However imports decreased from Indonesia and Malaysia
- the second and third largest non-EU suppliers. Imports
from Indonesia declined 2.6% to €73.4 million in 2014.
Imports from Malaysia declined 8.7% to €35.1 million
(Chart 4).
The EU imported 125,200 m3 of glulam in 2014, 12.1%
more than the previous year. Most glulam imported from
outside the EU consists of Laminated Veneer Lumber
(LVL) for window frames and other smaller dimension
products rather than larger structural beams.
During 2014 there was a significant increase in imports of
LVL from Russia, Indonesia and Malaysia, the three
largest external suppliers of this commodity to the EU.
Imports from Russia increased particularly strongly, by
41% to 25,100 m3, boosted by the weakness of rouble in
the second half of 2014.
Imports from China, the fourth largest external supplier,
were at a similar level to the previous year (Chart 5).
Competition from European LVL production is expected
to increase significantly in 2016 with development of new
domestic capacity.
EU imports of wood windows were €24.8 million in 2014,
7.3% more than the previous year. Most of these imports
derive from other European countries, notably Norway,
Bosnia, Switzerland and Serbia. Imports from China, the
largest supplier outside Europe, were only €1.9 million in
2014, 5.3% less than the previous year (Chart 6).
Chart 7 provides more detail of recent trends in EU
markets for joinery products imported from China.
Imports of wooden doors from China increased into the
UK, Romania, France and Ireland during 2014, but
declined into Belgium.
German and Italian imports of Chinese glulam increased
slightly in 2014, but this was offset by a decline in imports
into the UK. EU imports of wooden windows from China
were mainly destined for France in 2014. Exports to
Poland, previously a significant market, were negligible
last year (Chart 11).
Large increases in LVL capacity in Europe and Russia
The German trade journal EUWID reports that LVL
capacity in the EU is expected to rise from the current
level of 410,000 m3 to 590,000 m3 by the middle of next
year. Current capacity consists of a 230,000 m3 line
operated by Metsa in Finland and a 180,000 m3 line
operated by Pollmeier in Germany.
An additional 80,000 m3 of capacity is now being
installed by Steico in Poland and a further 100,000 m3 by
Stora Enso in Finland.
Meanwhile, MLT which operates in western Russia
currently has 120,000 m3 of installed LVL capacity. New
investment by MLT is expected to increase this capacity to
150,000 m3 by the middle of next year.
This production is believed to be based on softwoods, with
the exception of Pollmeier in Germany which utilises
beech.
* The market information above has been generously provided
by the Chinese Forest Products Index Mechanism (FPI)
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