Introduction

The spruce market in France continues to navigate challenging waters as the bark beetle crisis floods Eastern France's forests with dry wood. As we approach the end of 2024, the interplay of declining demand and prices for sawn timber, coupled with economic difficulties, presents a complicated landscape for timber producers.

Declining Demand and Prices

For the past two years, the volume of timber consumed and the prices have been on a downward trend. Observations indicate a sharp decline in construction activities, which heavily impacts timber demand. In 2024, the construction sector witnessed a staggering 34% decrease in housing starts compared to pre-COVID levels. This downturn in new builds has extended its negative effects into the renovation sector, which is now feeling the strain.

Higher interest rates, despite some easing in bank loan conditions, along with inflation, have diminished consumer purchasing power. This has led to cautious spending habits that further exacerbate the already brittle market conditions.

Affected Sawmills and Financial Losses

French sawmills, particularly those focusing on white softwoods, are forecasting substantial financial losses for the current year. Sawmills that previously thrived on robust demand are now grappling with reduced order volumes. For instance, standard roof trusses that once fetched €320/m³ are now struggling to attract buyers at around €220–230/m³. Major market players now anticipate a drop to €210/m³, showcasing the extent of price pressure within the industry.

Jean-François Pachon, from the Mouthe sawmill in Doubs, has highlighted how the influx of bark-beetle infested wood has forced his operations to focus more on formwork—a less profitable product that demands cutting at lower yields. As he prepares for 2024, he estimates a revenue drop of 10% to 12%, reflecting the widespread distress among small and mid-sized sawmills.

Effects on Neighboring Markets

The unfavorable situation is not exclusive to France. Countries like Germany and Austria face similar or even worse predicaments. The German construction sector, hampered by low building activity, has led to significant ramifications for timber demand. These difficulties are underscored by announcements of bankruptcy within prominent companies, such as the Ziegler Group, which employed 3,200 workers.

In Austria, the scenario is bleak, with major players reporting revenue declines of up to 32% in some cases. With bark beetles ravaging spruce forests and causing wood shortages, the irony lies in soaring costs for logs at approximately €110/m³ at factory gates, while sawmill prices crash.

Current Market Dynamics

There exists a marked disparity in timber availability across regions like the Vosges and Jura massif. While the prices for large framing timber remain suppressed, bark-beetle-infested logs are being mechanically harvested, showing a relative bounce back in price. Specifically, these logs are holding a price range of €55/m³ to €65/m³, albeit still falling short of delivering profitability to the processors given the overall declining quality and yield.

With timber markets tightening, even with slight decreases in bank interest rates, concerns loom over future prospects for sawmill operators. Observations signal a challenging environment extending into 2025, pushing timber buyers and suppliers to remain vigilant and responsive to market shifts as they maneuver this turbulent landscape.

Conclusion

As the timber industry grapples with the multifaceted crisis driven by biological, economic, and environmental factors, stakeholders will need to adapt and strategize for sustainability and resilience moving forward. A concerted effort will be necessary to stabilize a sector that is vital not only to the economy but to the broader fabric of sustainable resource management.