France: softwood lumber to finally benefit from the construction sector's success?

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Are rising construction prices finally starting to reflect on the softwood lumber market? Some sawmill representatives would now be inclined to think so. At the latest timber auctions organized in the French Grand Est, a general trend seems to be following this direction. It is characterized by a firm demand, by rising prices for certain products and by rather positive comments from sawmill representatives on activity in the building sector.

However, buyers distinguish two segments of the market that are not currently operating at the same speed. That of the logs destined to become beams gives clear signs of recovery. This was the case at the auction held in Gérardmer (Vosges), on March 30, 2017, where prices for products whose volume was under 2 m3 in fir-spruce have increased by at least 6% over the last 6 months (according to ONF). In Jura, on April 13, 2017, an annual increase of 1.5% to 3.5% was recorded on 1m3 spruce and 1.5 m3 spruce assortments.

In the sector of small diameter commercial timber, "the market condition is satisfactory", commented Hervé Peseux, a logging operator specializing in these assortments. The results of the auctions held in Jura confirm its observation since barely 5% of the volumes presented at the auctions did not find a buyer, while in April 2016 the figures were twice as high.  

In his turn, Laurent Tautou, the manager of timber marketing at ONF auctions in Franche-Comté, announces a slight price growth at an annual basis.

"For smal diameter timber, over a year, we see an average increase of 5% or + 2 euros per m3," he coomented. 

In the sawlog market segment, producers actually record a real increase in activity in industrial wooden structures sector. To explain this phenomenon, one must look for the reasons beyond the French borders.

"For some time we have been observing the decreasing presence of the German exporters in France because they are concentrating on other destinations. Fabrice Chauvin, who is in charge of the eponymous sawmill, says it frees markets spots for French sawmills.

"In addition, he continues, we are currently witnessing an upturn of construction sector which is manifested in increased demand for farm houses and technical goods."

On the other hand, the situation is different in the traditional wooden structures sector which seems to have some difficulty in rebounding. However, many small and medium sawmills working in this niche observe that their carpenter customers have just benefited from two consecutive months profiting from the beginning of construction works. In fact, the prices of large logs seem to be relatively stable with, in some cases, a slight fall in prices.

As to ONF auctions in Jura, the demand for large sized timber remains satisfactory, as the level of unsold goods remains unchanged over six months (24% of the volumes offered for sale). Our calculations on the evolution of fir prices in the Jura for 6 months show that logs of 1 m3 went down by 3% to 48 euros/m3 (for standing timber, see table below). At the same time, prices for 4 m3 assortments increased by 3% to 57 euros/m3, while prices for 2 m3 fir logs remained firm at 53 euros/m3.

However, these figures must be balanced out according to the difference in the quality of the marketed timber as spring supply is generally worse than the one in the autumn. As to spruce prices, one must add at least 15% to fir prices (see table below).

The activity in the small-sized assortments also affects the PACA region (Provence-Alpes-Côte d'Azur), especially the energy industry. "The market is tight, we do not find enough raw wood, prices are affected by this. Local logging operator Hélian Pirola complains about the fact that ONF and co-operatives now operate under state control, competing with timber merchants. And the lack of raw wood is likely to be accentuated soon because the two large biomass power plants -Uniper in the Bouches-du-Rhone and Silviana in the Var- are now operational. A cumulative timber demand of 1.1 million tons per year is expected in Paca and adjacent regions.

                                                    FIR PRICE DYNAMICS IN THE FRENCH EAST

                                                            In euros/m3 under bark

                                                    Standing timber and sorted timber

                                                        ONF acutions in Franche-Comté






Change in %     

          Over 1 an  Over 5 months
1 m3 53,25 47 50 48,20 +2,5 -3,6
1,5 m3 56 50 51,5 50,75 +1,5 -1,5
2 m3 58     52,5 52,5 52,5 - -
2,5 m3 59,25  54 53,3 53,8 -0,4 +1
3 m3 60,5   55,5 54 54,9 -1,1 +1,7
3,5 m3 61,4    56,5 54,5 55,9  -1,1 +2,6
4 m3 62,40 57,75 55 56,75 -1,7% +3,2
Compared prices should represent the corrisponding periods and wood quality

                                                  SPRUCE AVERAGE PRICES IN JURA

                                     In euros/m3 under bark, standing timber and sorted timber

                                                     ONF auctions, April 2017

1 m3 63
1,5 m3 64,5
2 m3 66
2,5 m3 67,5
3 m3 69
3,5 m3 71

Source : Robert Wood

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