French construction timber market at a turning point

Fordaq: RW
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The state of the French softwood industry is deteriorating. The latest construction industry figures, which have recently dropped at the end of April 2012, are not encouraging at all. Over the first two months of this year, the number of planning applications fell by 1.2% compared with December 2011, while the rate at which actual construction works started leveled off. Even more worrying is that banks balk at lending money: they now apply to the letter the criteria for granting loans and reduce the repayment period. As a result, there has been a 34% drop in homebuyer’s loans over the past quarter. Furthermore, according to experts a rise in interest rates is likely to happen soon (the average figure is currently 3.83% and it is expected to go up to 4.25% before the end of 2012). Other European countries (Italy, the UK, Germany, etc.) have similar falling figures for these indicators.

The outlook for the construction industry is bleak and sawmills are beginning to feel the first signs of weakening markets. Tensions related to sawn softwood prices became apparent at the end of 2011, and a downward trend in prices is now setting in progressively. Imported sawn wood is sold in France at prices 10 euros/m3 lower than those charged by French producers. As pointed out by Fabrice Chauvin, the eponymous president of a limited company, for large businesses, be them integrated or associated, this is springtime, the ‘big market’ era. Which means that, on the wholesale market, large retailers are launching consultations with important wood processors, with low-price contracts for 3-4 months or commercial gestures from suppliers such as free timber processing in exchange for keeping prices stable. While prices for superior quality timber (classes 0 and 1) remain stable on account of its relative scarceness, those for standard quality timber frame (class 2) are a matter of dispute. Things are not going any better for the packaging industry. On this overnight market, order books get full at the last moment and many sawmillers are trying to reduce stocks in order to bail out their ailing accounts. Under the circumstances, a decline in business activity is forecast for the second quarter of 2012.

Price of Spruce/Fir sawn timber in France
Price EXW/M3 VAT excl.
  Index 01/05/2012 Price 01/05/2012 change
Quality 1
(thickness 27mm)
100 250 EUR stable up
Quality 2
(75x225, 63x160mm)


187 EUR -3% à -5% up
Quality 3
(thickness 18/27mm)
100 137 EUR -5% up
Quality 4
(75x225, 63x160mm)
100 130 EUR -5% up
Source: Robert Wood for Fordaq
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