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Italian: Wood Market and Furniture Market Review

¡¾2002.04.18¡¿

Italian imports tumble

While the overall value of Italian imports of most hardwood products between January and September 2001 (see statistics) was comparable to the previous year, the nine month data masks a significant fall in imports after June 2001. Italian imports of nearly all hardwood products were very buoyant in the first and second quarters of 2001. However, comparing the third quarter of 2001 with the third quarter of the previous year, there was a significant fall in the value of imports of most products including tropical logs (down 6%), beech logs (down 44%), oak logs (down 15%), other temperate logs (down 13%), tropical lumber (down 19%), beech lumber (down 36%), oak lumber (down 6%), other temperate lumber (down 9%), and temperate hardwood veneers (down 16%).

Protracted summer slowdown

The scale of the decline during the third quarter indicates that the traditional Italian summer slowdown was unusually protracted during 2001. The downturn also mirrors developments in Italy¡¯s economy. There was reasonable optimism at the start of 2001 as the economy seemed to be bouncing back after some difficult years and with many businessman looking forward to the full replacement of the lira with the euro at the start of 2002. However confidence was dented during the second half of 2001 as the global economy cooled. The scale of turnaround is reflected by a 2.6% fall in Italy¡¯s industrial production during November 2001, the biggest monthly decline in nine years.

Furniture sector slows

Activity in Italy¡¯s furniture sector, the largest in Europe and an important consumer of hardwoods, has been slowing since the middle of 2001. A study by the Economic Studies Centre of Cosmit/Federlegno Arredo indicates that in the first 6 months of 2001, production by the Italian wood furniture sector was up 3.8% on the same period the previous year. This compares with 6.2% growth during the whole of 2000. The Italian furniture research organisation, CSIL, now forecasts that Italian furniture production will grow by less than 2% during 2002.

Although a reduction in interest rates coupled with modest inflation is helping to bolster Italy¡¯s domestic furniture demand, the sector is struggling to maintain the strong sales experienced over the last three years. Like other European countries, Italy¡¯s furniture sector is having to cope with increased competition from overseas suppliers. Italy¡¯s imports of wooden furniture during the first nine months of 2001 were up 10% by value compared with the same period the previous year. Imports from Romania, Switzerland, and Austria were particularly strong. Unlike other European countries, Far Eastern manufacturers have yet to make a significant impact in Italy¡¯s domestic market.

Overseas furniture sales down

However the situation is different on export markets. Overseas sales of Italian furniture have weakened due to slowing demand and intensifying competition both from the Far East and Eastern Europe. In an effort to steer off the threat of competition from low wage countries, Italian furniture manufacturers are now actively seeking partners for the development of joint-initiatives in these countries, particularly in Eastern Europe. Italian furniture manufacturers are also responding with increased marketing efforts.

Prospects in Italy for 2002 now look more encouraging. In late February it was reported that the ISAE Index of Italian consumer confidence rose to it¡¯s highest for almost 12 years. The Italian retailers¡¯ association Confcommercio, is forecasting that Italy¡¯s GDP will rise by 1.2% in 2002 and by 2.2% in 2003. Economic recovery is expected to start from the second half of 2002 and to be brought about by a rise in both consumer spending and exports. The Economist Intelligence Unit forecasts that "by 2003 the economy should be performing close to its full non-inflationary potential."

The import figures reveal some important shifts in the Italy¡¯s sourcing of hardwoods. Italy remains a major importer of tropical - primarily African - logs, but import volumes are in decline as primary processing operations are shifting to tropical countries. Restrictions on the export of Cameroon logs have led to an increase in Italian log imports from the Central African Republic, Liberia and Congo (Brazzaville). The recent announcement that Cameroon¡¯s export ban will extend to ayous, a species popular in Italy, will intensify this trend during 2002. Italy¡¯s tropical sawn lumber imports were reasonably steady during 2001, partly compensating for the decline in log availability. Cameroon has now replaced Ivory Coast as the leading supplier of sawn lumber to Italy, although Italian imports from both countries were on the rise during the first half of last year. Sawn lumber imports from Indonesia declined last, due to the ban on exports of ramin and a general decrease in availability.

Big decline in beech imports

Considering temperate hardwood imports, the most noticeable trends are the big decline in beech imports, both logs and lumber, and the rise of Eastern European countries, notably Croatia, in the supply of logs and lumber to Italy. The fall in beech imports between 2000 and 2001 is perhaps slightly misleading since trade levels were unusually high in 2000 following the storms in Central Europe during December 1999. However this trend is also likely to reflect underlying problems of over-stocking in the European beech market last year.

Italian imports of oak logs and lumber held up better than beech last year, partly reflecting the fashion for oak in the European furniture sector. Last year, Italian imports of temperate hardwoods from Croatia, and to a lesser extent Romania and Russia, were expanding at the expense of the USA, France and Hungary.

Europe¡¯s largest veneer importer

Given the importance of Italy as a supplier of furniture, it is hardly surprising that Italy is Europe¡¯s largest importer of veneer. Italy¡¯s imports of hardwood veneer were strong during the first half of 2001, but there were signs of a slow-down during the second half. Veneer imports from Ivory Coast and Ghana were rising last year, a trend which reflects a partial shift in veneer production away from Italy to tropical countries. Veneer imports from the United States also rose strongly during the first six months of the year, but slowed between June and September.

Italy¡¯s plywood imports were on the rise last year, with significant gains being made by suppliers of tropical plywood in Gabon and Morocco, and suppliers of birch and beech plywood in Latvia, Romania and Slovakia.

Compared to many Northern European countries, Italy is not a significant importer of joinery products. However last year there were signs of increase in imports of door components, notably from Romania, and window components, particularly from Switzerland. Italy¡¯s imports of parquet panels were reasonably stable during the first half of 2001, but began to decline in the second half of the year.

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