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Report from
Europe
EU27 tropical timber imports stronger than expected
so far in 2020
Total EU27 (i.e. excluding the UK) import value of
tropical wood and wood furniture products was US$1.98
billion between January and August this year, 14% less
than in 2019. This is a significantly higher level of import
than forecast earlier in the year with the ¡°Great
Lockdown¡± having a severe impact on the wider EU27
economy and on the supply side in tropical countries.
The fact that EU27 trade in tropical wood timber products
was cooling even before the onset of the COVID-19
pandemic makes this performance even more remarkable.
Chart 1, which shows the value of EU27 imports of
tropical wood and wood furniture products each month
during the last five years, highlights that while imports fell
sharply in May this year there was a very strong rebound
in June and July. Although imports declined again in
August, they were at a five year high for that month
(which is typically very slow during the European summer
vacation period).
The continued relative buoyancy of trade is probably
partly due to the strength of the DIY sector in the EU27
during the lockdown with many people taking the
opportunity to carry out home improvement work. In some
EU27 countries with less stringent lockdowns, such as the
Netherlands and Sweden, commercial construction and
manufacturing activity also continued, at a slower pace but
without interruption throughout the spring and summer
months.
With the easing of lockdown measures from May onwards
and boosted by the introduction of large government
stimulus measures, the economy picked up across the
EU27 in the third quarter. Official GDP figures have yet to
be published (due early November), but according to
projections by Barclays an 11.5% rebound of euro area
economic activity is expected in the third quarter, led by
Spain (17.9% q/q) and France (16.8% q/q). Barclays
projections for third quarter rebounds in Italy (12.5% q/q)
and Germany (8.2% q/q) are less dramatic but only
because the initial downturn in the second quarter was
more muted.
EU27 imports have also been given a boost by the relative
strength of the euro on international exchange markets, the
euro-dollar rate rising sharply from less than 1.10 to nearly
1.20 between May and August.
The dollar¡¯s weakness is due to uncertainty in the run up
to the presidential elections and the severity of the
pandemic in the United States.
More serious challenges emerging for the EU27
economy
However, it remains to be seen whether the recovery in
EU27 imports will be sustained as there are, once again,
serious challenges emerging for the European economy.
The relative strength of the euro is already creating a
headache for the European Central Bank which is
becoming alarmed at the impact on export competitiveness
of EU27 manufacturers at a time when other factors are
weighing down heavily on demand.
Meanwhile, the second waves of COVID infection across
Europe have grown to be larger than the first and have led
to renewed lockdowns which now threaten a final quarter
economic contraction. Assessing the impact of the new
lockdown measures is difficult because, unlike six months
ago, they are now more regional, or targeted, sectorspecific
and time¨Climited. However, they are adding to an
already uncertain economic climate.
Forward looking indicators show that economic
momentum in the EU27 is likely to get worse before it
gets better. October registered a third consecutive monthly
decline in the Euro Area Purchasing Managers Composite
Output Index, down 1.1 points to 49.4 and taking it back
into contractionary territory (any score below 50 indicates
that a majority of those surveyed recorded a decline in
purchasing).
The latest PMI data for eurozone construction is also not
encouraging. IHS Markit, who undertook the survey,
commented in their 6th October report that ¡°The PMI
results for September show that the eurozone construction
sector remained stuck in contraction as builders struggled
to secure new work amid the COVID-19 outbreak.
The survey pointed to broad-based declines across
housing, infrastructure and commercial projects. In line
with increases in coronavirus cases, and the potential for
stricter restrictions to be imposed, a rebound in the nearterm
seems unlikely. In fact, eurozone builders remained
pessimistic about growth prospects¡±.
IMF forecasts published in October now suggest that euro
area GDP will decline 8.3% this year followed by growth
of 5.2% in 2021. Of the largest economies, prospects are
strongest in Germany, with a 6% decline forecast for this
year to be followed by 4.2% growth next year.
The French economy is forecast to fall 9.8% this year
followed by 6% growth next year. Italy's economy is
forecast to fall 10.6% this year and to rebound 5.2% next
year. Spain's economy is forecast to fall even more
drastically this year, down 12.8%, but to rebound more
strongly, by 7.2% in 2021.
Also in October, the European contractors¡¯ federation
FIEC published their annual report which forecast an 8.5%
fall in EU27 construction activity in 2020. FEIC said the
final months of 2020 would be critical for the industry as
new projects were expected to decline during the Autumn.
In a sign of the heightened uncertainty, the FIEC report
included no forecasts for next year. However, FIEC
warned that ¡°The situation might worsen in 2021 if
investments in construction, both public and private, do
not recover significantly. Moreover, due to losses in equity
during the health crisis, companies will find it difficult to
embark on new projects.¡±
EU27 tropical imports hold up reasonably well in all
sectors
Unsurprisingly, EU27 imports of all the main tropical
wood products fell in the first eight months of this year,
but in each case the decline was less dramatic than
expected earlier in the year when the scale of the
pandemic and associated lockdown measures were
becoming apparent.
In the year to August, EU27 imports of wood furniture
from tropical countries declined 10% to US$797 million,
while imports of tropical sawnwood declined 17% to
US$432 million, tropical mouldings were down 21% to
US$179 million, veneer down 10% to US$120 million,
joinery down 21% to US$108 million, plywood down 23%
to US$93 million, marquetry and ornaments down 18% to
US$43 million, and logs down 26% to US$27 million.
Imports of tropical flooring were stable, but at a
historically low level of US$40 million (Chart 2).
Imports fell into all six of the largest EU27 destinations
for tropical wood and wood furniture products in the first
eight months of this year.
Imports were down 17% to US$398 million in the
Netherlands, 12% in France to US$383 million, 16% in
Germany to US$306 million, 11% in Belgium to US$292
million, 15% in Italy to US$150 million, and 15% in Spain
to US$103 million.
However, imports increased in Denmark, by 9% to US$86
million, and in Poland, by 5% to US$48 million. Imports
in Sweden fell but only by 2% to US$45.5 million (Chart
3).
EU27 wood furniture imports from Vietnam close to
last year¡¯s level
In the furniture sector, EU27 imports from Vietnam almost
matched last years¡¯ level in the first eight months, down
only 1% to US$354 million.
Imports from Indonesia were down 10% to US220 million
in the first eight months of this year, although this
compares with a relatively strong performance in 2019 and
imports this year are still higher than in the same period
during 2018 (Chart 4).
EU27 imports of wood furniture from the other main
South East Asian suppliers declined sharply, including
Malaysia (down 22% to US$60 million), Thailand (down
29% to US$19 million, and the Philippines (down 9% to
US$4 million).
EU27 imports of wood furniture from India were down
20% to US$133 million in the first eight months. Partly
due to supply side issues, imports from furniture from
India almost came to a complete halt in May this year, but
then rebounded very strongly in July and August to record
levels for the summer months.
EU27 tropical sawnwood imports down sharply from
all major supply countries
EU27 imports of tropical sawnwood declined sharply from
all major supply countries in the first eight months of
2020; down 17% from Cameroon to 182,500 cu.m, 24%
from Brazil to 82,200 cu.m, 16% from Gabon to 67,900
cu.m, 15% from Malaysia to 59,600 cu.m, 16% from
Congo to 33,800 cu.m, 33% from Côte d'Ivoire to 15,800
cu.m, and 23% from Ghana to 12,200 cu.m.
However Ecuador bucked the downward trend, with EU27
imports from the country rising 15% to 16,600 cu.m, much
destined Denmark and likely driven by strong demand for
balsa for wind turbines. Imports of sawnwood from
Indonesia also increased slightly, by 11% to 5,500 cu.m,
but this follows a 74% reduction in 2018 (Chart 5).
The decline in imports of tropical sawnwood in the first
eight months of 2020 was mirrored by a similar decline in
EU27 imports of tropical mouldings/decking. Imports of
this commodity were down 10% from Brazil to 53,800
tonnes, 17% from Indonesia to 35,500 tonnes, 17% from
Peru to 6,500 tonnes, 20% from Malaysia to 5,100 tonnes,
24% from Gabon to 3,900 tonnes, and 35% from Bolivia
to 3,400 tonnes (Chart 6).
EU27 imports of tropical logs held up reasonably well
from the Republic of Congo in the first eight months of the
year, down only 7% to 21,400 cu.m, but fell sharply from
all other leading cupply countries including Cameroon (-
30% to 7,700 cu.m), Central African republic (-50% to
6,800 cu.m), DRC (-43% to 5,600 cu.m), and Liberia (-
38% to 4,300 cu.m) (Chart 7).
EU27 tropical veneer imports from Gabon on the rise
despite pandemic
In the veneer sector, imports from Gabon bucked the
wider downward trend in EU27 imports in the first eight
months of 2020. The EU27 imported 105,700 cu.m of
veneer from Gabon between January and August this year,
26% more than the same period in 2019, mainly destined
for France. Veneer imports also increased 32% from a
small base to 7,500 cu.m from Equatorial Guinea, in this
case destined mainly for Spain and Italy.
However, EU27 veneer imports were down 26% from
Côte d'Ivoire to 36,600 cu.m, 37% from Cameroon to
17,200 cu.m, 13% from Ghana to 4,600 cu.m, 18% from
Indonesia to 3,400 cu.m and 84% from DRC to 800 cu.m
(Chart 8).
EU27 imports of tropical hardwood faced plywood were
down from all the leading supply countries in the first
eight months of 2020. Imports fell 20% to 49,400 cu.m
from Indonesia, 22% to 45,300 cu.m from China, 4% to
17,400 cu.m from Gabon, 21% to 9,000 cu.m from
Vietnam, 14% to 7,200 cu.m from Morocco and 28% to
6,300 cu.m from Brazil. (Chart 9).
EU27 imports of tropical hardwood faced plywood from
the UK ¨C a re-export since the UK has no plywood
manufacturing capacity - declined 44% to 7,600 cu.m.
EU27 tropical flooring imports rise while other joinery
imports decline
Given the situation in the wider market, one of the least
expected trends in EU27 import data is a slight recovery in
imports of tropical flooring products in the first eight
months of this year after a long and persistent period of
decline (Chart 10).
Imports were up 2% to 15,900 tonnes, with the gain due to
a 31% rise in imports from Malaysia to 5,600 tonnes,
mostly destined for Belgium.
Imports declined only moderately from Brazil, down 1%
to 3,500 tonnes, and Indonesia, down 4% to 3,800 tonnes.
Imports from Vietnam fell more rapidly, by 19% to 1,800
cu.m.
EU27 imports of other joinery products from tropical
countries, which mainly comprise laminated window
scantlings, kitchen tops and wood doors, declined from all
three of the main supply countries in the first eight months
of 2020.
Imports from Indonesia were down 28% to 55,000 tonnes,
12% from Malaysia to 33,800 tonnes, and 7% from
Vietnam to 10,600 tonnes. For African countries, EU27
imports of this commodity increased from the Republic of
Congo, by 12% to 2,300 tonnes, but fell from Ghana, by
40% to 1,100 tonnes. (Chart 11).
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