Price declines in sawmill by-products in France

May 21, 2024
  • text size

The segment of first transformation of softwoods in France is going through a period of turbulence. Not only have sawn timber prices dropped considerably since spring 2023, almost returning to pre-Covid levels, but also the prices of by-products follow the same downward trend.

Sawmill by-products (SBP) have long been considered the poor relatives of the sector - miscellaneous by-products. Now, SBPs are no longer mere sawmill waste because times have changed. Material scarcity, hence increased purchase prices, rising energy costs, hence higher manufacturing costs, make even the slightest sawdust or the most common offcuts falling from the saw valuable.

Their importance is not negligible. In first transformation, depending on the products and sawing processes, SBPs represent 35% to 50% of the volumes of logs processed and 15% to 20% of the quantities of sawn timber cut in second transformation companies. As for the revenues generated by their sales, they can account for 10% to 15% of sawmill turnover. By-products have thus become a determining adjustment variable in the income statement of the latter; they have a real impact on their activities, particularly on their ability to source wood.

Profound structural changes have been shaking up the sector in France for some time now, with a reshuffling of the product hierarchy. "The lucrative market for TMP chips no longer exists because the paper mills that consumed them have disappeared from France or switched to recycled cardboard," observes Bruno Ronzel. Bois et Connexes de Franche-Comté (BCFC), the company he manages, valorizes 400,000 tons/year of SBP. The manager of BCFC adds that, in addition, many industrial sites manufacturing panels have changed their sourcing methods by gradually substituting logs and by-products for recycled wood.

However, this decrease in demand has been partially offset by the arrival of pellets, which has disrupted the product hierarchy. "The selling price of sawdust necessary for pellet manufacturing has become higher than that of chips." Bruno Ronzel explains that sawdust is used directly without refining, which is not the case for chips transformed into pellets: the additional cost of grinding them contributes to a lower selling price than that of sawdust.

Like many other products, by-product prices reached peaks in the post-Covid period in France: from 2021 to 2022, increases of 60% were recorded. But since the third quarter of 2023, supply has exceeded demand in all SBP families. "While softwood sawmills have reduced their sawn timber production by 15% to 20%, the volume of by-products has not decreased. Indeed, many fascia boards, coming from wood from sanitary felling, are unsuitable for packaging and are therefore ground into chips." According to the manager of BCFC, the supply therefore remains at a high level while the general demand for by-products has decreased, undergoing the construction crisis which impacts not only sawn timber but also panels consuming by-products.

The situation has further complicated with the abrupt halt of the pellet market. "The products we were selling at 350 euros/tonne ex-works are now barely selling at 230 euros," confides a pellet manufacturer. Arrival of new manufacturers in France (10% to 15% additional production in 2023), increasing imports, price inflation that disturbed consumers with precautionary purchases at the end of last summer, mild winter... These are all reasons that explain why at the beginning of spring 2024, pellet stocks are at their highest and prices at their lowest.

Obviously, sawdust suffers from the weakness of construction and especially the sluggishness of the pellet market. In the space of 3 semesters, sawdust prices have dropped by at least 50%. However, some pellet manufacturers have noted a beginning of recovery after the slight setback in early April 2024, while others indicate that their wholesale customers are announcing purchase volumes. "I think we are still in a disrupted market that brought us early to the low prices of summer," says a manufacturer who nevertheless hopes for a demand recovery in the third quarter of the year.

Products 3Q 2018 4Q 2020 4Q 2021 4Q 2022 4Q 2023 % Change over 1 year
Hardwood sawdust 37.8 29.8 33.1 45 51.5 +14.4
Softwood sawdust 43 41.6 43.5 67.7 68.7 +1.5
Medium granulometry sawmill chip H 30-40% 44.2 42 46.6 68.3 61.9 -9.4%
Medium granulometry forest chip 56.3 53.6 56.50 67.1 73.9 +10.1
Pellet Big Bag producers 192.6 199.2 216.9 438.8 302.8 -30.9
Pellet Bulk distributors by 5 T 262 286.7 304 609.6 446.8 -26.7