Logs and wood products: International trade is stepping up

Woodworking industries see increased competition for raw materials

The European Confederations of the sawmill, parquet and plywood industries (EOS, FEP and FEIC resp.) have announced difficulties sourcing raw materials due to increasing log exports. In addition to sourcing problems and rising prices for logs, companies are under increasing pressure from finished and semi-finished products entering the european markets from countries with lower production costs and environmental standards.

For some years now, several subsectors of the woodworking industries are experiencing major difficulties in accessing their prime raw material, i.e. logs. Access to this raw material is further complicated by the entry of new actors on the European market, creating a shortage of logs with increased prices and negative side-effects. The difficult access to logs combined with the increased imports from finished and semi-finished products in connection with the growing competition from low-cost producers, puts the future of these sectors at risk.

Export of logs to non-European countries
Since 2004, the export of logs, both soft- and hardwood, has increased continuously to reach 2.9 million tons in 2006 (EU-25) and the trend is expected to continue. While the situation for softwood is rather stable and mainly destined to neighbouring European markets (i.e. Norway), the situation for hardwood logs is less optimistic. In total, over 1 million tons of broadleaved logs were exported in 2006. Compared to 2004 this is an increase of more than 50% in only 2 years time. Based on forecasts for 2007, the increase could even attain 80%.

The main species exported are oak, beech and poplar and they are almost all destined for the Chinese and other Asian markets. The beech exports towards China are high for several years and recently also exports for oak and poplar are soaring. As oak is already rather scarse on European markets, the export of logs is creating a shortage and oak might become unavailable on the European market in the next decade.

The evergrowing demand from Asian markets, combined with the domestic demand, does not only create shortages of logs, but also has the intrinsic characteristic to increase dramatically the prices for the available logs on the market. In this perspective, the price advantage of Chinese bidders is huge, as low labour costs in their home market allow for larger budgets to be spent on acquiring the raw material.

Import of (semi-)finished products from non European countries
The logs exported to China and other non-European markets are destined to be transformed into (semi-)finished products in these low labour costs countries. Logs are sawn, planed, peeled and transformed into parquet, furniture, plywood and other wooden products and materials. These (semi-)finished products are then re-exported to European markets.

Looking at the imports of furniture, parquet and plywood from China, the main country of origin for these products on European markets, a clear upward trend is apparent. Plywood imports from China have tenfolded in only 5 years time. Parquet is also facing a boost of Chinese imports in the last year with an increase of 164%. Furniture imports are also considerable with a steady average increase of 30% registered over the past years.

Further information
Press release Market Access to Raw Materials: Log exports to third countries threaten European domestic supply of 2008-02-06 (PDF-document, including import and export statistics and graphs)


European Organisation of the Sawmill Industry (EOS), the European Federation of Parquet (FEP) and the European Federation of the Plywood Industry (FEIC), press release, 2008-02-06.