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September 24, 2019

US-China trade war hits the French oak market: prices for logs at auctions down sharply this year

US-China trade war hits the French oak market: prices for logs at auctions down sharply this year

The euphoria that characterized France's oak market in 2017-2018 is now about to end. This is one of the conclusions of the public sale of Beaune (Côte d'Or) in Burgundy, organized by the French National Forest Office (ONF).

The results of the Burgundy auction clearly confirm the tendencies of weakening in demand which already were noticeable at the end of this spring's auctions.

It's a already a fact, since the beginning of the year, the market has turned. The slowdown in economic activity in China has had the effect of curbing trade with the outside world. By the end of the first quarter of 2019, the exporters of oak logs found themselves with stacks of containers stuck in ports or with heaps of wood waiting in parks or roadside.

But at the same time, oak logs sold in the fall continued to emerge from forests due to the last mild winter. And as the private owners wanted to take advantage of the highest prices of oak, they sold a lot during the winter. This rather brutal gap between supply and demand was further aggravated by the US-China trade conflict, resulting in large increases in US customs duties on certain commodities (flooring, window frames, windows, etc.). This lifting of barriers at the US borders also had negative effects on the demand for sawnwood, especially on second-choice products.

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