According to the European Sawmiller Organisation (EOS), production of sawn hardwood in Europe was significantly impacted by the coronavirus crisis in 2020 with a strong decline particularly in France and Germany. Overall sawn hardwood production declined from around 6 million m3 in 2019 to just above 5.5 million m3 in 2020.
However, in 2021 the situation dramatically improved with a 13% increase in production to close to 6.3 million m3. This was the highest level of sawn hardwood production in the EOS countries since 2008 and came on the back of a sustained increase in demand. Production is forecast by EOS to decline by 3% this year, back to around 6 million m3.
The downturn in production comes at a time when sawn hardwood stocks are already at a low level and is due to log supply shortages rather than a downturn in demand. EOS suggest that “national and European legislation is curbing the availability of raw materials while many hardwood species remain underutilized”.
According to EOS, hardwood supply challenges in Europe are being compounded by high levels of log exports to China, an issue which has been particularly prominent in France and Belgium where shortages of oak log have been particularly pronounced.
Furthermore, hardwood companies that rely on foreign trade are negatively affected by the geopolitical situation: long-distance exports are hampered by high freight rates, pandemic-related tension in China and rocketing fuel prices.
Rebound in European wood flooring demand stronger than expected
According to data published at the FEP General Assembly and Parquet Congress 2022 held on 9 and 10 June in Hamburg, Germany, the European market for wood parquet flooring was at the highest level for a decade last year. While FEP had anticipated an increase in parquet consumption as the market recovered from disruption caused by the COVID pandemic the previous year, the rebound in 2021 was stronger than expected.
FEP figures show that European parquet consumption increased by 6.2% in 2021 following a slight 1.6% gain the previous year. There was particularly strong growth in the first quarter compared to the same period in 2020. During the rest of the year, demand continued to grow but at a slower pace as consumers began again to direct more expenditure to other activities such as leisure and travel. Nevertheless, renovation, and adaptation of homes to new ways of working and living after the pandemic, continued to act as significant drivers of parquet consumption growth.
Consumption of parquet increased in almost all European countries in 2021 according to FEP. Countries such as Italy and France, which were unable to offset losses during the spring 2020 lockdown and reported declines in parquet consumption for the year 2020 as a whole, reported particularly large increases in parquet consumption in 2021 compared to 2020. Croatia, Romania and Switzerland also reported significant increases in parquet consumption while Portugal is focusing more on exports.
In contrast, countries where parquet consumption recovered more ground in the second half of 2020, generally reported lower market growth last year. This was the case for Scandinavia, Austria, Spain, and Germany.
Parquet production in FEP countries increased even more rapidly than European consumption last year, rising almost 7% to 82.6 million square meters, a level not seen since before the 2008 financial crisis. Production in all European countries, including non-FEP members, increased by nearly 8% to close to 98 million square meters. The largest European producing country in 2021 was Poland, followed by Sweden, Austria and Germany.
Last year, as in previous years, the vast majority of European wood flooring production (83%) comprised multilayer flooring, with 15% comprising solid wood and 2% comprising mosaic. These proportions were largely unchanged compared to 2020.
In terms of species preference, the European parquet sector continues to be overwhelmingly dominated by oak which accounted for 81.9% of all floor facings compared to 81.8% in 2020. Ash and beech now make up most the rest of the volume, respectively 5.3% and 2.8% last year. Tropical wood species made up only 2.1% of flooring manufactured in FEP-countries last year, down from 4% five years before and 15% in 2008.
In terms of wood’s position in the total European market for floor coverings in 2021, FEP estimate that wood parquet accounted for around 5% of total consumption of 1.95 billion square meters. Of other materials, textiles supplied 39% of the market in 2021, stone/ceramics supplied 22%, vinyl 20%, laminates 12%, and other materials 3%. The share of wood has remained broadly level at 5% in the last five years. Vinyl’s share has risen from around 15% in 2017, mainly at the expense of laminates, stone/ceramics and textiles.
While these figures apply only to flooring, the role of floor coverings in determining the look and feel of a room, and the desire of most consumers to match styles, means they reflect wider fashion trends in the European interiors market.
Oak supply shortage drags down wood flooring production in 2022
According to FEP, European parquet markets have diverged in 2022. While Italy, Scandinavia and Spain have seen continuing increases in demand, the markets in Benelux, France and Switzerland have been flat while sales in Austria and Germany have been declining. To a large extent, this last trend is driven by supply side problems as producers have struggled to fill orders due to wood shortages.
FEP comment that this problem of short wood supply is expected to extend into all European markets in the coming months. The supply problems, which began with the serious supply chain disruption during the COVID pandemic, have become more acute since the start of the war in Ukraine.
A large proportion of the wood raw material and semi-finished products used by European parquet producers were previously sourced from Ukraine, Russia and Belarus. According to FEP, European supplies of wood from these countries have been impacted by (in chronological order):
- Lack of workforce in Ukraine,
- International payment difficulties with Russia,
- Transport/logistics difficulties with both countries,
- EU ban of all chapter 44 (wood & wood products) imports from Belarus,
- Russian countermeasures including a ban on exports to EU and other “hostile” countries of 44.03 products (Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared),
- PEFC’s & FSC’s consideration of wood from Russia and Belarus as “conflict wood”,
- Wood originating from Russia and Belarus “practically” not EUTR (European Timber Regulation) compliant,
- NGOs’ pressure to stop any wood trade flow with Russia and Belarus,
- FSC’s suspension of wood coming from Ukrainian war areas,
- EU ban of all chapter 44 (wood & wood products) imports from Russia.
FEP note that “due to the already very tense situation on the wood markets and the ecological responsibility, it is not possible for the [parquet] sector to fully diversify sources of wood to other species and/or other countries”.
The European parquet industry, through FEP, is therefore lobbying the EU authorities for temporary safeguarding, mitigation and support measures to the sector. Specifically it is asking that the EU introduce a measure to restrict oak logs from the region, such as a quota, and for “coherent policies allowing higher mobilization of existing European wood resources (Forestry Strategy, Biodiversity Strategy…) as long as principles of Sustainable Forest Management are applied”.
Longer-term FEP has acknowledged the need “to explore sustainable (and recyclable) substitutes and alternatives to oak”.
European Commissioner says deforestation regulation is a “top priority”
According to a statement by European Environment Commissioner Sinkevičius when he met with the European Parliament ENVI Committee on 30 May “the proposed Regulation on deforestation will be one of the top priorities for our cooperation in the coming months”.
Commissioner Sinkevičius said that “Global events and alarming deforestation rates in the greatest rainforest of the Earth remind us of the urgency of the task, and I know that this Committee, and this Parliament as a whole, share the sense of urgency”.
Commissioner Sinkevičius went on to express the hope that “once both co-legislators will have finalised their positions, we can launch the trilogues under the Czech Presidency of the Council – and reach an agreement as soon as possible”.
Note that the Czech Presidency of the Council will be held between 1 July and 31 December 2022. Trilogues are informal tripartite meetings on legislative proposals between representatives of the Parliament, the Council and the Commission. Their purpose is to reach a provisional agreement on a text acceptable to both the Council and the Parliament.
From the EC perspective, Commissioner Sinkevičius expressed a desire for “An agreement, which allows us to effectively tackle the [deforestation] problem, and which therefore needs to be ambitious and needs to retain the core features of our proposal: the due diligence obligations for operators and large traders, the strict traceability, the coverage of legal and illegal deforestation, and the benchmarking system”.
In other developments related to the proposed deforestation regulation include:
- A comprehensive summary of the draft legislation, the starting positions of the European Council and European Parliament, and the positions of key stakeholders, has been published by the European Parliament Research Service in April 2022 at:
- https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2022)698925
- Another briefing by European Parliament Research Service issued in April provides an analysis of the strengths and weaknesses of the European Commission’s impact assessment (IA) accompanying the legislative proposal and is available at:
- https://www.europarl.europa.eu/RegData/etudes/BRIE/2022/730312/EPRS_BRI(2022)730312_EN.pdf
- Industry bodies have been issuing statements commenting on the draft legislation and on amendments proposed by the European Parliament ENVI Committee, including by the European forest-based Industries at:
- https://www.cepi.org/wp-content/uploads/2022/04/Statement-of-the-Forest-based-Industries-on-the-ENVI-Draft-Report-on-Deforestation-Regulation.pdf
- And Palm Oil Sector Organisations at:
- https://t.co/fwdbj6q7Mz
Raft of new EU measures to deliver on the European Green deal
Much of the recent policy focus in the forest products sector has been on the EU’s draft deforestation regulation. However, a notable feature of Commissioner Sinkevičius’ presentation to the European Parliament ENVI Committee on 30 May, and another presentation he delivered on the same day to EU Agricultural Ministers, was to highlight that the deforestation regulation is just one of a raft of proposed measures to deliver on the European Green Deal.
In combination, these measures aim to make the EU’s climate, energy, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030. Many of these measures have potentially far-reaching implications for EU trade in all forest products.
A centrepiece of these measures, according to Commissioner Sinkevičius, is the Ecodesign for Sustainable Products Regulation, which “will allow us to replace our current ‘take-make-replace’ economic model, which not only depletes our resources, pollutes our environment, damages biodiversity and drives climate change, but also makes us too dependent on resources from elsewhere”.
Alongside this Commissioner Sinkevičius reported that “preparations for the revision of the Packaging and Packaging Waste Directive are well under way, with a view to making all packaging reusable and recyclable by 2030. And work also continues on the new legislative initiative to tackle false Green Claims made by companies on environmental impacts and performance”.
Under another program, REPowerEU, the Commission is proposing measures to save energy, diversify supplies, accelerate the clean energy transition, and smartly combine investments and reforms. Bioenergy, much derived from wood, is a key component of the renewable energy mix in the EU, currently representing about 60% according to Commissioner Sinkevičius.
Commissioner Sinkevičius noted that bioenergy “is a domestically available and stable energy source, but we need more sustainable sourcing” and that “our estimates show a moderate but steady increase of biomass use until 2030. If we prioritize the use of non-recyclable biomass waste and agricultural and forest residues, we can ensure the production of sustainable energy in line with REPowerEU”.
On the other hand, he suggested that “the current situation needs to change” because “the way we currently use biomass is contributing to a reduction in carbon sinks and stocks, bad conservation status for forest, air pollution, and deforestation in third countries”. As a result the EC “proposed to reinforce the sustainability criteria of the Renewable Energy Directive in July last year, obliging Member States to apply the principle of cascading use”.
New rules for sustainability of construction products sold in the EU
A Green Deal measure not mentioned directly by Commissioner Sinkevičius on 30 May is the proposed revision of the Construction Products Regulation (CPR) published in March this year. This revision has particularly far-reaching implications for timber sold in the EU Single Market as it will establish new requirements for provision of environmental data for all products sold into the EU construction sector.
The CPR aims to ensure that construction products can freely circulate within the Single Market, achieving this by laying down harmonised EU standards for construction products and rules on the CE marking of these products. The existing harmonised rules focus on technical properties such as fire, insulation, and structural performance. A key aim of the CPR revision is to extend rules to cover sustainability aspects of construction products.
According to the proposed revised CPR, construction product manufacturers will have to deliver environmental information about the life-cycle of their products and comply with several obligations, including:
- Design and manufacture a product and their packaging in such a way that their overall environmental sustainability reaches the state of the art level;
- Give preference to recyclable materials and materials gained from recycling;
- Respect the minimum recycled content obligations and other limit values regarding aspects of environmental sustainability;
- Make available, in product databases, instructions for use and repair of the products;
- Design products in such a way that re-use, remanufacturing and recycling are facilitated.
To prove that products meet the EU requirements, the manufacturer will be required to draw up a declaration of performance and a declaration of conformity and affix the CE marking. The manufacturer will draw up technical documentation describing the intended use and all the elements necessary to demonstrate performance and conformity.
This technical documentation will include the mandatory calculation of environmental sustainability assessed in accordance with harmonised technical specifications. The required technical specifications are expected to align closely to EN 15804+A2, the latest EU standard for performing a life-cycle assessment (LCA) and producing an Environmental Product Declaration for construction products.