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Report from
Europe
UNECE forecast continuing stasis in EU sawn
hardwood consumption
The UNECE Committee on Forests and the Forest
Industry (COFFI) released their Annual Market Review
2017-2018, together with several market statements by
national governments in the UNECE region (which
includes the sub-regions of Europe, North America and the
CIS), in advance of their 76th session to be held in
Vancouver on 5-9 November
see
http://www.unece.org/index.php?id=47708
COFFI report that total consumption of sawn hardwood in
Europe fell by 3.8% in 2017, to 12.6 million cu.m, due
primarily to a 6% fall in consumption in Turkey, the subregion＊s
largest national market for sawn hardwood. This
was driven by falling domestic production which accounts
for the large majority of wood supply in Turkey.
COFFI forecast no significant change in the overall market
for sawn hardwood in Europe during 2018, with stasis in
consumption (12.6 million cu.m), production (14.0 million
cu.m), imports (5.0 million cu.m) and exports (6.3 million
cu.m).
According to COFFI data, European apparent
consumption of sawn tropical hardwood was flat at around
1.12 million cu.m per year between 2016 and 2018.
Consumption of tropical sawn hardwood was stable in
most European countries, although a continuing fall in
France was offset by a rise in the Netherlands.
As Europe＊s tropical log imports have fallen to a
negligible level, Europe＊s demand for tropical sawnwood
is now fed by direct imports from the tropics.
The key trend in European sawn hardwood markets
highlighted by COFFI is the continuing strong preference
for European oak, for which prices continued to increase
in 2017 and the first half of 2018. According to COFFI,
this rising trend is likely to continue.
European oak log prices are escalating partly because of
increased overseas demand, particularly in China and
Vietnam, coupled with log export bans in Croatia and
Ukraine.
Domestic sawn hardwood production has increased in
Croatia, a key supplier of good quality oak to the rest of
Europe. Croatian production nearly doubled in the five
years to 2017, to 1.4 million cu.m, and now accounts for
10% of European production. However, this has been
insufficient to offset the shortfall in total European oak
supply.
Due to supply shortages most European sawmills now
require orders for oak to be placed well in advance and
insist that their customers purchase lesser grades to secure
the prime grades. Supplies of beech, on the other hand, are
not so restricted and prices are more stable.
While overall sawn hardwood consumption in Europe has
changed little in the last three years, COFFI highlight
various trends in consumer sectors with significant
potential to change the future direction of trade and
utilisation of hardwood in Europe.
Hardwood opportunities in the construction sector
In the European construction sector, COFFI observe that
the current rate of very slow growth is unlikely to pick up
for some time. Despite a clear need for more housing to
satisfy rising demand, the numbers of building permits and
starts have trended downward in Europe in recent years,
and the outlook for new residential starts is for a decline in
the longer term.
On the other hand, residential remodelling is forecast to
increase and to reinforce its position as the principal
construction activity in Europe. In the euro-zone
residential remodelling activity is forecast to increase from
Euro 407.4 billion in 2018 to Euro 418.4 billion in 2020.
This, at least, is good news for hardwoods which tend to
be more widely used to upgrade existing houses than in
the new-build sector.
In addition to lacklustre forecasts in residential
construction the type of structures built in this sector are
changing, with a gradual shift away from separate houses
in favour of flats and other higher density construction.
This is a result the aging of the population, declining
household size, substantial reductions in state subsidies for
housing, and rapid increases in land prices and
construction costs.
Again, these changes may present opportunities for
increased wood use, including hardwoods, in Europe. The
desire to reduce construction costs and time on site is
driving a slow rise in demand for modular wood-based
construction systems using a variety of engineered wood
products.
COFFI particularly highlights the rapid growth in
European production and use of cross-laminated timber
(CLT) which is particularly well suited for efficient and
rapid high-density construction. COFFI observe that the
share of CLT in European wood construction is still small,
but interest and investment in the product is rising.
Drawing on a review of the strategic plans of European
producers, COFFI Predict that European CLT production
will more than double from 0.7 million cu.m in 2017 to
1.81 million cu.m in 2020.
Of course, most of production of CLT and other
engineered wood products comprises softwood, a situation
which is unlikely to change. Compared to softwoods,
hardwoods are much less readily available in large
consistent volumes and grades at competitive prices.
However, there is potential to develop specialist grades of
CLT using hardwoods for applications where high
strength, durability or aesthetic character are needed.
For this reason, a major focus of American Hardwood
Export Council (AHEC) promotion in Europe is to
encourage use of hardwood for CLT manufacture.
Most recently AHEC sponsored ※MultiPly§, a major
demonstration project in collaboration with Waugh
Thistleton Architects and Arup as part of London Design
Festival, which ※combines American tulipwood with
innovative methods of modular construction to confront
two of the current age＊s biggest challenges 每 the pressing
need for housing and the urgency to fight climate change.§
To date only a very small volume of hardwood CLT has
been manufactured in the EU to supply high-end bespoke
projects, notably a health centre completed in the UK in
2017 claiming to be the world＊s first hardwood CLT
building.
While at present only temperate hardwoods are being
considered for use in CLT in the EU, some larger tropical
suppliers have expressed interest in exploring the
opportunities for tropical hardwood in this sector, given
the high strength to weight ratio of many tropical species,
and their durability (implying competitive advantages for
tropical hardwoods in CLT elements exposed to the
weather).
European joinery markets shaped by energy efficiency
and environment
In relation to the joinery market in Europe, COFFI note
that demand for windows and exterior doors is
increasingly shaped by energy efficiency and
environmental performance, including recycling options.
COFFI suggest that wood is considered an excellent
source of material for window frames in Europe because
of its aesthetics, stability over a high temperature range,
excellent thermal and acoustic insulation qualities and
green credentials.
On the other hand, wood frames now account for only
about 20% of the European window market, and metal每
wood-combination frames account for an additional 5%.
The remaining three-quarters of the European windowframe
market comprises PVC and metal.
The preferred materials differ significantly among
European countries, due mainly to differences in tradition
and climate. Southern European countries largely use
metal frames for their windows, and Nordic countries have
a clear preference for wood.
In Eastern European countries, where overall consumption
volumes are still low compared to Western Europe but
growing more rapidly, PVC is strongly preferred for
window frames and accounts for about 80% of the market,
with metal accounting for nearly 10% of the rest.
Combinations of metal (typically aluminium) and wood
are gaining popularity in all European markets due to their
good price每 performance ratio, low maintenance
requirements, and their ability to carry the now standard
double and triple glazing units.
The same tendency can be observed in the exterior-door
segment, where combining metal and wood not only gives
stability but also increases the perceived level of security.
The interior- door segment in Europe continues to use
mainly wood, although plastic doors are appearing on the
market.
Shifts in European furniture sector problematic for
tropical suppliers
The COFFI review also highlights several trends in the
European furniture sector with significant potential to
impact on European trade in both hardwoods and finished
wood furniture products.
The long-term shift in global furniture production away
from the UNECE region to Asia, particularly China, is
noted in response to lower production costs and rising
demand in emerging markets. However, COFFI suggest
this shift is now slowing ※due to increased automation,
demand by customers for shorter delivery times and
increasing costs in previously low-cost regions.§
COFFI also observe the large switch in European wood
furniture production from Western Europe to Eastern
Europe, particularly Poland and Lithuania, where
manufacturers both of which are low cost manufacturers
with easy access to the EU market.
This last trend is obviously a blow to non-EU suppliers of
wood furniture, who may struggle to compete with the
emergence of a relatively low cost and highly automated
furniture manufacturing sector in Eastern Europe.
It is also problematic for external hardwood suppliers. The
Eastern European furniture industry so far has been
generally less inclined to utilise hardwoods imported from
the tropics and other non-EU countries than the traditional
industries of Western European countries like Italy, Spain
and France.
This is very clear from Polish wood furniture and timber
production data reported by COFFI. Production of wood
furniture in Poland, which increased 10% in 2017 to
US$7.7 billion, depends almost entirely on European panel
products and softwood.
Poland imported only 300,000 cu.m of sawn hardwood in
2017 and nearly all consisted of oak and beech from
neighbouring countries. Only 5% of sawn hardwoods
imported into Poland in 2017 were tropical species.
Another key trend, on-going for a long time but showing
no signs of slowing, has been a shift away from traditional
long-lasting hardwood furniture, which was viewed as a
long- term investment, to low-cost ※flat-pack§ ※semidisposable§
furniture. People are moving more often, and
many younger consumers like the flexibility that
※temporary§ and affordable furniture provides.
Rising plywood production in Finland and Russia
On plywood, COFFI report that overall consumption in
Europe was 8.7 million cu.m in 2017, up by 3.4% over
2016. Market expectations are generally positive, with
plywood consumption in Europe expected to grow by
0.2% in 2018.
Drawing on data from the European Panel Federation,
COFFI note that the main plywood applications in Europe
are construction (39%) and furniture (30%) followed by
transport (13%), packaging (8%) and other uses (10%).
European plywood production increased by 5.1% in 2017,
to 5.1 million cu.m. Finland 每 the most important producer
in the subregion, accounting for more than 24% of total
production 每 recorded a 9% increase in production volume
in 2017. Europe＊s UNECE members forecast another
increase in plywood production in 2018, but at much
slower pace of only 0.5%.
While COFFI report that plywood production in Russia
declined 0.8% to 3.7 million cu.m due to a shortage of raw
materials new investment looks set to increase Russia＊s
production capacity dramatically in the next two years.
Drawing on a review of eight large plywood investment
projects by the WhatWood consultancy agency in Russia,
COFFI suggest that Russia＊s plywood production capacity
will increase by at least 700,000 cu.m between 2017 and
2021.
CEI-Bois and ETTF team up to give European industry
a stronger voice
The European Timber Trade Federation (ETTF) decided at
their General Assembly in Madrid this summer to become
a member of CEI-Bois. The decision gives the wider
European timber sector a more united and stronger voice
in dealings with decision makers in government and the
market, according to a report in the latest ETTF
newsletter.
"Our respective memberships are complementary,§ said
ETTF Secretary General Andr谷 de Boer. ※CEI-Bois is the
lead body representing the woodworking and processing
industries across Europe, while the ETTF＊s national
member federations bring to that a global trading pillar,
representing the leading timber importers and distributors.
The ETTF remains an independent legal entity, continuing
to pursue its own projects and strategies in the separate
and specific interests of the ETTF membership. For the
first three years, the ETTF will evaluate its membership of
CEI-Bois on an annual basis to assess the wider benefits to
its own members.
※But we can see value in CEI-Bois having its base in
Brussels and thus strong connections with EU
government,§ said Mr de Boer. ※In forming part of their
new trade working group, we can also share our expertise
in the international market and particularly on such key
topics as the EU Timber Regulation and the EU FLEGT
Action Plan.§
Mr Antonicoli, CEI-Bois General Secretary, welcomed the
ETTF＊s move. ※Having our two forces under one roof will
bring us greater influence so we can achieve more for all
our members,§ he said. ※A tight cooperation with the
ETTF will help develop and consolidate our new trade
working group, which we set up several months ago and
where it could play significant role.
※We are also a well recognised and respected voice and
brand among the EU institutions,※ said Mr Antonicoli.
※And we have committed to include ETTF priorities in our
yearly advocacy plan and to adapt our messages to the EU
to ensure we effectively represent and defend the interests
of European timber traders.§
EC reports steady progress in EUTR implementation
On 5th October, the European Commission (EC) formally
adopted the EU Timber Regulation (EUTR) Report 2017,
the second biennial report on implementation since the
regulation came into law in March 2013. The second
report covers the period March 2015 to February 2017 and
is based on the reports from the 28 EU Member States and
Norway.
According to the EC, the report ※reveals steady progress
after four years of its application. Almost all countries
comply with the formal requirements of the EUTR. Over
the reporting period, the number of checks made and
sanctions applied for violation of the EUTR have
significantly increased§.
However, the EC also notes that ※continuous efforts are
needed to ensure a uniform and effective application of the
EUTR across countries. Uneven implementation can have
potential implications in terms of both the effectiveness of
legislation and a level playing field for market operators.
Further effort should be made to ensure that the scope and
quality of the checks carried out reflect a more consistent
approach across the EU§.
The EC intends to ※continue to cooperate with the
Member States on supplementing EUTR guidance to
achieve a uniform application and facilitate its
implementation by the operators§ and will also ※help
approximate enforcement approaches between competent
authorities and continue to explore additional tools to
improve the EUTR implementation in cooperation with
the Member States and relevant stakeholders§.
EC publishes＊country overviews＊ to help EUTR
implementation
UNEP-WCMC, as part of their EC-funded project to
provide information services in support of EUTR
implementation, have released the first five country
overviews on ※timber-exporting third countries§, namely
Brazil, China, Myanmar, Russian Federation and Ukraine.
The announcement on the EC EUTR website
(http://ec.europa.eu/environment/forests/timber_regulation
.htm) states that the overviews aim ※to help operators and
Competent Authorities identify and assess the risk of
sourcing illegally harvested timber for a sound
implementation of the EU Timber Regulation§.
The country overviews all include the following
disclaimer, that ※their content does not necessarily reflect
the views or policies of UN Environment, UNEP-WCMC,
the European Commission, contributory organisations,
editors or publishers, and they cannot be held responsible
for any use which may be made of the information
contained therein.§
This means they have no legal status, and in no way
constitute an equivalent form of guidance to that contained
in the text of the EUTR itself or in the European
Commission Guidance Document for the EUTR
(Commission Notice of 12.2.2016).
However, the country overviews are significant for being
the only source of information on individual supply
countries to aid implementation of the EUTR ※prepared
for the European Commission§ and which are referenced
on the EC＊s own EUTR website.
This implies the reports are likely to be widely used and
referenced, at least as background information, by EU
Competent Authorities, Monitoring Organisations and
operators to help implement and regulate EUTR due
diligence systems.
UNEP-WCMC notes that the documents ※are updated
periodically based on available information and are subject
to external review§ and invite input for consideration for
inclusion in the next update to be sent to timber@unepwcmc.
org.
FLEGT IMM Germany Consultation, 16th November
2018
The EU FLEGT Independent Market Monitor (IMM), the
ITTO project funded by the EU, is holding its third Trade
Consultation of the year in Berlin on November 16, with
the support of German timber trade federation GD Holz.
The IMM monitors EU trade flows from countries
engaged in the Voluntary Partnership Agreement (VPA)
process. The key focus is to track trade volumes and
market impacts of FLEGT-licensing by VPA countries,
applicable to all Indonesian exports to the EU since
November 2016.
※The IMM＊s remit is also to gauge EU trade perceptions
and ideas for the development of the VPA project and
FLEGT licensing and to feed these back to the EU and
VPA Partners,§ said IMM Lead Consultant Sarah Storck.
※So the objective of the IMM Trade Consultations is both
to share our latest trade monitoring results and provide
importers and other timber sector stakeholders the
opportunity to discuss the EU FLEGT programme.§
The first IMM Consultation took place in London with
support from the UK Timber Trade Federation, the second
in Nantes at the Carrefour International du Bois exhibition
in association with the International Tropical Timber
Technical Association (ATIBT). Delegates represented
import, distribution, end-user and specifier sectors.
In response to trade feedback from the first two events, the
Berlin Consultation will place even greater emphasis on
discussion workshops. These will focus on three themes:
 Trends in the European tropical timber
sector 每
background, reasons and solutions
 Recognising priorities and purchase
dynamics for
tropical wood products. Assessing how supply
chain relationships develop and the relevance and
impact of FLEGT licences.
 FLEGT and ※sustainability§ 每 European
timber
procurement policies/sustainable timber
definitions and their recognition of FLEGT.
The Consultation is free and takes place from 10am to
2.30pm in Berlin＊s Verbändehaus. It is the day after GD
Holz's Branchentalk on digitialisation, so delegates can
attend both.
For more information contact Sarah Storck at lead@flegtimm.eu
For more details and to register:
http://www.flegtimm.eu/index.php/imm-events
Data to help drive EU tropical timber market share
Accurate, accessible market information and intelligence
are vital for developing European demand for sustainably
sourced tropical timber. That is the core theme of the
European Sustainable Tropical Timber Coalition annual
conference, taking place in Paris＊s Tropical Gardens on
October 25.
An international line-up of speakers will address the topic
of ＆Using data to drive market share＊. These will include
Sarah Storck and Rupert Oliver, respectively Lead
Consultant and Trade Analyst for the FLEGT Independent
Market Monitor, an ITTO project.
Other speakers include Benoit Jobb谷-Duval of ATIBT,
Arnaud H谷troit of France＊s Le Commerce du Bois, Julia
Kozlik of PEFC International, Anand Punja of FSC
Europe, and David Hopkins of the UK Timber Trade
Federation.
The premise for the STTC Conference is that reliable data
is key to ＆shaping marketing strategy, enhancing
transparency and unlocking sales share in any business＊.
However, a question mark hangs over the current calibre
of market intelligence on the European tropical timber
sector. Actions needed to address this will be discussed
and an afternoon of workshop discussions will allow
delegate feedback.
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