Category: 2013

The report this month focuses on flooring.  The European flooring sector is going through a major period of change, and is also a good indicator of what is happening in the wider European wood industry. It’s a valuable source of information on the latest economic and fashion trends, and one of the few sectors where it is possible to analyse directly the competitive position of wood in relation to non-wood materials.  On this last issue, the flooring sector clearly demonstrates how technological innovation in other material sectors continues to put enormous pressure on wood’s market position. It shows how the European wood sector is fighting back with initiatives focusing heavily on high product quality and strong environmental performance. It also shows how the European wood sector is responding to weak and negative growth in domestic markets by targeting export markets in other parts of the world, notably China. In doing so, it is seeking to exploit its particular strengths in the fields of design, technical innovation, product quality, and environmental performance.  

Across the EU, signs are emerging of a gradual improvement in economic conditions and confidence. Fears of a euro currency collapse have receded into the background and the political situation seems more stable in Southern Europe. GDP growth resumed from the second quarter of 2013 in several European countries, notably the UK and Germany. Construction sector activity has also improved significantly in the UK and Germany from the start of the summer onwards.

Total supply of wood furniture into the EU27 market is estimated to have been €50.4 billion in 2012, down 2% from €51.5 billion in 2011 (Chart 1).  EU27 production decreased 4% from €46.45 billion to €45.22 billion. Imports increased 3% from 5.07 billion to 5.27 billion. In 2012, imports accounted for 11.6% of all furniture supply to the EU, up from 10.9% the previous year, but below 12.5% recorded in 2010 (Chart 2). Overall consumption is estimated to have fallen 4% in 2012 from €43.35 billion to €41.75 billion (Chart 3).  

The TTJ has published a “Special Focus” on the UK and wider European market for tropical hardwoods. The Editorial highlights challenges for the tropical wood industry in the region, noting underlying weakness of the European economy and commenting that hardwood is “generally the last timber to benefit from an upturn”.

There are early signs that the EU may be at last emerging from recession. The 27 countries’ combined gross domestic product grew 0.4 per cent in the second quarter compared to the previous three-month period, when it shrank 0.1 per cent, according to Eurostat (Chart A). A rise in household spending underpinned the economic momentum in many countries. There are also signs of increased business optimism and higher manufacturing output.

Overall demand for African sawn hardwood across Europe is slow. However the strong focus of the EU market on sapele, and local shortfalls in supply after a long period of limited buying, is now translating into rising prices for this species. UK inventories of kiln dried sapele are particularly low relative to demand and distributors have been restocking.

European demand for hardwood plywood is very slow. The UK market is slightly more buoyant than elsewhere on the continent. Importers report that slow European consumption is matched by reduced availability in China due to labour and log supply shortages. Apparent supply shortages are partly the result of European buyers becoming more selective in their choice of plywood suppliers since enforcement of the EU Timber Regulation (EUTR) after March 2013.

The European economy may finally be exiting its longest post-war recession but entering a period of stagnation or very weak growth at best, latest data suggest.  The purchasing managers index (PMI) for the euro zone rose to a 15-month high of 48.9 in June. Germany’s PMI rose 0.7 point to 50.9, signalling modest growth. France’s score also rose but remained below 50. 

Economic sentiment in Europe improved a little during the second quarter of 2013. Talk of a possible “depression” and euro-collapse has receded into the background. Nevertheless overall economic conditions remain fragile and the construction sector, the major driver of wood demand, is still deep in negative territory.

Monthly data for EU27 hardwood plywood imports suggests that European trade in this commodity is coming under pressure from the combined effects of the recent slowdown in European construction and the enforcement of the EU Timber Regulation (EUTR) from 3 March onwards (Chart 1).