Forest Industries Intelligence

The total value of EU imports of wood products was Euro 17.48 billion in 2016, 1.3% more than in 2015. This followed an increase of 12% to  Euro 17.25 billion in 2015. In 2016 EU import value was at the highest level since 2008 just before the global financial crises (Chart 1).

Like the Domotex show held in Hanover earlier in the month, the IMM Furniture Fair in Cologne between 16 and 22 January highlighted the challenges facing tropical suppliers looking to increase their share of the European market, as pressure continues to mount from domestic manufacturers and non-wood materials. Demand for wooden exterior furniture, traditionally an important niche market for tropical wood products, is coming under pressure from other modern weather-resistant materials.

The European trade show season is now well underway, starting in Germany during January with the Domotex flooring show in Hanover and the IMM furniture show in Cologne. The shows provide good insights into European wood market prospects in the year ahead.

Latest trade data shows that the rising trend in EU import value of tropical wood products that began in the second half of 2014 levelled off in 2016. The stability in the euro value of tropical wood imports in the second half of 2016 may hide a slight fall in the volume of imports as European currencies weakened on foreign exchange markets during that period (which implies a rise in import prices).

The EU’s FLEGT process has recorded two landmark events in recent weeks. The first ever FLEGT licenses were issued by the Indonesian Licensing Unit on 15 November and the licensed consignments landed in the EU in early December. And after nearly six years of negotiations, Vietnam and the EU agreed in principle to sign a FLEGT Voluntary Partnership Agreement (VPA) and to ratify the agreement as soon as possible in 2017.

EU imports of tropical timber products increased sharply between January and May this year, but slowed again in the four months to end September 2016 (Chart 1). Nevertheless, the value of EU imports of tropical timber across all product groups in the first 9 months of 2016 was, at €1.741 billion, 2% greater than the same period the previous year. So far EU imports of tropical timber in 2016 have been close to levels last seen in 2011.

In the last ITTO report on the European plywood market (MIS 16-31 May 2016), it was noted that the share of tropical countries in EU plywood imports fell to an all-time low of less than 8% in 2015. While EU imports of plywood from tropical countries were rising slowly last year, imports from other countries increased more sharply, particularly of mixed hardwood plywood from China and birch plywood from Russia.

The French tropical wood company Rougier reported revenues of €78.5 million for the first-half of 2016, down 9.3% from the same period the previous year, in their consolidated accounts issued at the Board of Directors meeting in October. At the same meeting, the company also launched a strategic action plan to improve the group’s profitability and financial resources.  

Tropical suppliers to Europe’s wood flooring sector are being squeezed out as domestic production in the region is rising again, oak is becoming increasingly dominant, and competition from laminated flooring and other non-wood materials is mounting.

Eight years on from the financial crises, the recovery in the EU timber market remains slow and fragile. There is Europe-wide economic growth and key market sectors such as construction, furniture, and flooring are expanding, but the rate of increase rarely exceeds 2% per year in any individual sector or European country and some are still flat-lining. Deflation remains a constant threat despite a €60 billion-a-month programme of quantitative easing implemented by the European Central Bank – recently extended at least until March 2017.