French oak market marked by uncertainty

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Tensions on oak prices in France

 

After 4 weeks of interruption, sales resumed in April in France's public forests. Because of the lockdown measures, they all took place online. “These auctions only involved hardwood logs tailored for truck transport. Auctions for standing wood and industrial wood began in Normandy from April 30th Champagne-Ardenne, " explains Aymeric Albert, head of sales at France National Forest Office (ONF).

For beech, the season is over and the April heat contributed to further deteriorating prices. At less than 40 euros/m3 by the roadside, sellers are now wondering if they should not follow the example of Swiss or German foresters who do not hesitate to direct some of these products to wood energy market. At the end of the campaign, maximum prices rose to 60 euros/m3 for cut beech logs, 100-110 euros / m3 if container loaded.

For ash in secondary quality, the influx of volume due to chalarosis, a disease caused by a fungus that induces necrosis and wilt of the tree crowns, and the difficulties of finding transport on Vietnam have lowered prices by at least 10% since the end of February, with marked disparities between the basins of supply and distance from ports (see Table 1). In the meantime, uninfested ash trees can still find local sales (France and neighboring countries) " In mid-April we were able to sell beautiful white ash trees from the Sundgau in the Alsace for 130-150 euros / 130-150 euros / m3 by the roadside," says Aymeric Albert.

The sawyers remain cautious with the oak. Numerous timber traders have closed since the shutdown began, while China only started up again in mid-March, but there were no containers in the European ports. The good weather spurred the harvest and the forest companies were able to catch up with the winter time. As a result, there is no shortage of wood in the log yards, and buyers are not hungry for oak. Accordingly, the hardwood association of Franche-Comté called for a boycott for the auction in Pouilley-les-Vignes (Doubs) on April 15, 2020, because the ONF terms of sale were considered unacceptable by the buyers.

For oak sawyers, the situation is not easy to grasp. The uncertain economic development calls for great caution. With few exceptions, the oak lumber is under pressure. Parquetry is slowing down and stocks of planks - a commodity prone to chapping - are increasing at the end of spring. When it comes to block goods, large industrial customers are in favor of the craftsmen, who, however, have no foreseeable order behavior and often only order small quantities. 

Regarding exports to Asia, Chinese buyers have selected the suppliers and operators who are well cashed and who have enough shops to manage container freight prices that have doubled since the beginning of the year (1). “For the moment, the demand is there because the factories have restarted in China and deliveries have been much delayed. I have been able to extend my export contracts and am currently loading containers, but no one can say how long this will last.This exporter does not rule out the hypothesis that the request of the Chinese domestic market is not sufficient to offset the abrupt cessation of consumption in Europe and the United States.

The barrel stave wood is another concern. The market for wooden barrels has grown significantly in recent years. For some purchases that are linked to debt, buyers could run into financial difficulties if revenues fell. The two main markets, the USA and China, are currently fully exposed to the crisis. In Europe, wine sales of winegrowers have been suspended, especially since the restaurant trade, the event market and tourism have been shut down. As a result, barrel manufacturers are careful and many have switched to short-time work.  

In these conditions, it is not surprising to learn that since the beginning of the year, the prices for barrel stave wood has been around 15% behind auctions since the beginning of the year (with a considerable amount of sawn timber) (even more in some regions). However, the high-quality fine-grained and increasingly rare products continue to enjoy good demand (see Table 2). According to the ONF, the fall in oak prices in April 2020 primarily affects second-class goods " at a discount of 10 to 15% compared to autumn 2019, " says Aymeric Albert. Some buyers see even more substantial price cuts here (see also Table 3).  

In the short term, prices for hardwood auctions will not rise again before autumn. David Chavot, Margaritelli sawmill, has two concerns: " If our suppliers fail to adapt to the request by reducing the supply, the price of oak wood threatens to fall and we will also lose valuable oak logs to China ." As a result, the director of Margaritelli France stands for a meeting of forestry and processing so that the quantities offered are promptly adapted to requirements: " Because neither forest owners nor sawyers are interested in a fall in oak prices ." 

(1) The freight price for a 40 ft container for Fos-Dalian was $ 550 in early January, $ 1200 at the end of April 2020, $ 750-800 and $ 1500 for the Le Havre / Dalian route respectively.

Table 1: 

PRICE REDUCTIONS FOR ASH IN FRANCHE-COMTE

      Average prices in euros / m3 suitable for trucks

          Public auctions in Franche-Comté      

 

4Q 2017

4Q 2018

4Q 2019

2Q 2020

Change in %

2019-2020

Change in %

2017-2020

0.8 fm

55

60

67

55

-18%

-

1 fm

65

75

77

60

-22%

-8%

1.2 fm

70

80

85

65

-24%

-7%

1.4 fm

75

85

91

70

-2. 3%

-7%

1.6 fm

85

90

97

80

-17%

-6%


 

Table 2:

 BARREL PRICES IN THE CENTRAL FRANCE 

      Average prices in euros / m3 suitable for trucks

Public auction in Boigny-sur-Yonne (45) on 04/07/2020 

amount

average price 

0.5 fm

340

1 fm

431

1.5 fm

487

2 fm

526

2.5 fm

556

3 fm

584

NB: -3 702 m were for sale, 3 648 m were sold

-Quote of unsold quantity = 1.5%

- Up to 13 price offers per lot 

-The highest price was achieved by Merrain International with an average price of

820 € / fm (Los N ° 33063, state forest of Tronçais, 11 Angebote)

 

Table 3:

PRICES FOR SMALL OAKS IN THE EAST UNDER PRESSURE

Average prices in euros / m3 suitable for trucks

        public auction in the Jura      

amount

1Q 2017

1Q 2018

1Q 2019

1Q 2020

(1)

 Development  2018-2020

1 fm

116

157

144

90

-43%

1.5 fm

157

203

161

159

-22%

2 fm

186

233

172

208

-11%

2.5 fm

210

259

182

246

-5%

(1) -Q1 2020 prices refer to the auction in Lons-le-Saunier (Jura) on March 11, 2020, i.e. a few days before the shutdown due to COVID-19.

-NB: the main buyer of oak goods at this auction (30% of the quantity and especially the lots for block wood) paid for the lots on average 31% more than the next purchase offers.

 

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