Tag: Market Report

The recession in Europe has created many challenges for the European wood furniture sector. However the sector remains globally significant as a driver of design and production innovation. There are also signs that the international competitiveness of the European furniture sector is improving. 

While economic conditions varied across the EU during 2013, the latest European Commission (EC) data indicates 0% GDP growth for the region as a whole during 2013 (Chart 1).  That at least was an improvement on the 0.5% fall in GDP during 2012. The EC is also now confident that there will be a return to growth in 2014, albeit feeble at around 1.4%.

Reviewing the position of the tropical wood trade in Europe at the turn of the year is a sobering experience. Following the all-time low in EU tropical hardwood imports in 2012, all the signs are that imports in 2013 fell even further. In addition to low demand, an emerging problem has been the progressive erosion of the infra-structure to supply tropical hardwoods into Europe. Looking ahead, prospects for tropical wood in the European market do not look good. However, an increased focus on marketing and communication offers some grounds for optimism.

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.