France: ash and beech being affected by the increased freight tariffs

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Freignt tariffs going up in Asia negativelly affect French ash and beech markets

In the second quarter of the current year, trade on the French hardwood markets was mixed. The French oak continues to run with the wind, and the industry representatives do not see reasons why it should stop. In processed goods, virtually all products find their buyers on all destinations. As to standing timber, at worst, log prices remain stable over the last 6 months and, at best,the increase over the same period can reach 5% depending on the available supply and the more or less dense network of local woodworking enterprises.

As to ash, in France, its market observes two main trends. On the one hand, prices for the better qualities (from A to B / C) destined for the French domestic market or for exports to the neighbouring countries, have barely changed since autumn 2016, with demand always remaining satisfactory. On the other hand, trade in assortments of a lower quality - usually shipped to Asia - is negatively affected by the increase in ocean freight costs, resulting in a 10% to 20% drop in log prices over December 2016. 

Emmanuel Groutel, director of Wood and Logistics Expert (WALE), a company specializing in international timber markets, says that due to falling exports to Asia in late 2015 / early 2016 and overcapacity of ships, freight rates have dropped considerably. "Nevertheless, Hanjin - South Korean integrated logistics and container transport company - went bankrupt last autumn as demand on the international market picked up. There is therefore a relative recovery in freight rates."

The consequences for timber exporters were not long in coming. «Since the end of last year, container service tariffs in Asia have more than doubled. For example, for Marseille shipments, price increased from $600 to $1600 per container », says Michel Jacquin, Manager of the local logging and sawn timber company Bois 39.

This important and brutal increase affects not only ash, but also beech. The latter appears to be particularly affected by a combination of unfavorable factors, with better qualities A and B being an exception to this rule. In addition to the high cost of transport on large-scale exports, the Maghreb markets still appear to be very competitive in terms of price, with a great deal of competition from Romanian producers. "They are very active, especially on Tunisia, with freight rates lower than ours and a very aggressive pricing policy," says Noël Cenci, one of the French beech sector representatives.  

But the French beech log market also suffers from the sluggish activity on the European panel markets. The factories' wood yards are full, deliveries are carried out with fits and starts. With stringent certification requirements, with some producers preferring to use FSC rather than PEFC and less expensive chips made of recycled wooden packaging over logs, it's no wonder, then, that prices for standing beech have fallen from 5% to 10% since fall 2016 (see table below).

BEECH PRICE DECREASE IN THE FRENCH EAST

    ONF timber autions in Crançot (Jura)

                                                                    Price in euros/m3 for logged sorted wood

  11/03/2016 16/03/2017 Annual dynamics
1 m3 50,8        45,3 -10,8%
1,5 m3 54          52 -3,7%
2 m3 57,3 56,75 -1%
2,5 m3 59,4 60,3 +1,5%
3 m3 60,5 63,2 +4,5%

     BEECH PRICES IN SPRING 2017 IN NORD-FRANCHE-COMTÉ

                                         ONF timber auctions, on 21/03/2017 in Grandvillars (Territoire-de-Belfort)

                                                                      Prices in euros/m3 for logged sorted wood

  1 m3 42  
  1,5 m3  48  
  2 m3 52  
  2,5 m3 55,3  
  3 m3 58  

Source : Robert Wood

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