Several major transactions were announced in 2015 in the European panel industry and possibly the most significant was the creation of a joint venture by Sonae Industria SGPS SA (Portugal) and Celulosa Arauco y Constitucion (Chile).
Arauco is now entering the European wood based panel market through the new joint venture that was created at the end of November and is named Sonae Arauco.
Apparently Sonae had been exploring its options for the future since the second quarter of 2015 and had been linked with a number of take-over candidates by sources in the European panel sector prior to the deal with Arauco actually being concluded and approved by the European Commission’s Directorate General for Competition on 26th February 2016. In the main listing, the new ownership has been reflected.
In our last survey we reflected that there had been significant investment activity in Turkey and eastern Europe, with several new projects being listed in both areas. Now we are able to confirm that the MDF plant in Beypan Kayseri began production in 2015.
The ongoing investments in Turkey continue, with three plants still under construction for start-up in 2016/17: Camsan Bodurlar; SFC Kronospan; and Starwood Bursa.
All the news of new mills is listed in Table
1: European capacity development for 2016 and beyond, which now includes the Fantoni investment in Italy and the investments by Yildiz Entegre of Turkey in Pitesti (Romania) and Vladimir (Russia).
Over and above these developments, the news from 2015 in Europe is still of a gradual decline in the demand for laminate flooring, which in turn is bringing ever more raw MDF to the overall general market.
North America
In North America, MDF production and sales showed continued recovery in 2015 and the industry generally had a reasonably good production year, driven, particularly in the US, by the strong dynamic of the domestic housing market. But prices have again been under pressure as imports from South America, New Zealand, China and even Turkey have been putting economic pressure on domestic producers.
Weyerhaeuser Company and Plum Creek announced in November 2015 that they had entered a definitive agreement to create the world’s premier timber, land and forest products company with more than 13 million acres of the most productive and diverse timberland in the US. One consequence of this fresh development is that Plum Creek MDF in Columbia Falls, Montana, which overcame a fire in 2014, now becomes part of this newly-emerging powerhouse.
Other acquisition news from North America in 2015 has been the sale of Clarion Board’s HDF/MDF plant in Shippenville, Pennsylvania to Kronospan and also the sale of the world famous Medite MDF mill in Medford, Oregon, by Sierra Pine to Roseburg Forest Products.
A new investment has been announced by Kronotex for an HDF/MDF plant at its facility in Barnwell, South Carolina, to support its existing laminate flooring business, which up to now had been based on bought -in raw materials from elsewhere.
In Canada, the MDF business remained consistent, with a gently-improving market in the last year, with the most positive news being that the recommissioned ATC mill in Pembroke, Ontario is now, we understand, fully operational.
In Mexico, the positive capacity developments outlined last year are all in the construction phase and progressing well and these are reported in more detail later.
A year ago we suggested that a gradual recovery across Europe might be on the horizon, country-by-country, and this has been seen in some cases but not across all markets, due to difficult economic and socio-political dynamics. The slow, fashion-lead, decline in demand for laminate flooring continues and there are other changing trends affecting the use of MDF.
This year’s survey once again provides listings of capacity in the two regions as at the end of 2015. We also show the changes expected to capacity during 2016, 2017 and beyond.
Total all-European installed capacity reached approximately 24,401,000m3 in 2015, compared with 23,487,000m3 in 2014, with major growth seen in Russia, Belarus and Turkey.
The majority of MDF mills continue to work hard to optimise their installations (some not running at capacity) and are looking for continual production refinements and new product developments in order to maximise the opportunities within their individual facilities. A sad fact also is that on the pricing front, only minor upward changes took place, while the industry has been screaming for an overall price increase for a number of years.
This survey continues to be published in two parts; the second part will deal with the rest of the world outside Europe and North America and will be published in the August- September 2016 issue of WBPI.
The author and the editor of WBPI remain grateful to all those organisations and manufacturers which took the time to complete our online enquiry form and to all those other industry professionals who made valued contributions to the narrative.
We are happy to receive all new information regarding capacity changes at any time during the year, when it is most convenient.
European Capacity
Last year we reported that western and central Europe had no projects for new capacity under way, but now we can report the Fantoni SpA, Osoppo, investment in Italy with the project to replace the two currently operational multi-daylight presses used for MDF production, referred to as Plaxil 4 and Plaxil 5, with a continuous 65.5m press from Dieffenbacher, during 2016.
Capacity is anticipated to be roughly 330,000m3 per year but could be significantly more. This means that the replacement of the two multi-daylight presses will result in a capacity increase of about 10% or more.
The new MDF/HDF investments in Pitesti, Romania (401,000m3) and Vladimir, Russia (424,000m3) by Turkish based Yildiz Entegre Agac Sanayi Ve Ticaret AS, has also lead to orders for four treating and overlay lines for the MDF/HDF mills from Vits Technology GmbH at the end of November 2015, and other modifications.
Last year we reported an important change in the MDF sector in France, with the sale by Sonae, in March 2014, of the Isoroy MDF facility at Le Creusot to Kronospan. Now we can confirm that the last Isoroy MDF mill, at Ussel, was sold in 2015 to a new investor (not publicly disclosed) and is now privately owned and stands alone, effectively marking the disappearance of Isoroy (Sonae) from France.
The management at the Ussel plant was supported in the takeover of assets by a group of investors, including the regional investment fund FCI Limousin SAS, Limoges, who act as a co-investor in major projects relevant to the economic development of the region. Last year we said we could only speculate as to what the future holds and what Sonae will be doing with its MDF factories in Germany, such as Glunz and others and now we know, with the emergence of Sonae Arauco.
In Spain and Portugal, the Interpanel MDF mill, formerly owned by Tablicia and located in Villabrazaro, Spain and bought by Kronospan Group in December 2013, is still not yet in operation and it appears that no decision has yet been taken as to what to actually do with the plant. It still remains possible that the owners may eventually move the equipment to one of its other sites in eastern Europe.
Also strengthening the Kronospan group’s position in the Iberian Peninsula was the purchase of the 250,000m3/year Unopan MDF mill, in Salas a Quintanar, Spain in 2014, which saw the company emerge as a powerful new player in Iberia and now competing seriously with the Finsa group. The long-established MDF two-line facility in Mangualde, Portugal now emerges as one component in the newly formed Sonae Arauco group and the single MDF line at Valbopan in that country continues to produce its unique coloured MDF for specialised markets throughout Europe and elsewhere. Madibeira (Finsa group) has installed the old Jomar particleboard line, together with the MDF plant, thus on the site at Neles they can produce particleboard, MDF and/or Superpan (a mix of the two in one board).
With regard to the Benelux countries, western Europe and the changing ownerships and trends in the sector, the fact is that we still see HDF as a substrate for laminate flooring losing volume in western Europe, although in the east, in Russia and Turkey, this product is still growing in popularity.
The more recent trend in flooring still appears to be thin vinyl flooring (PVC), also with a click system. All the major HDF flooring players in Europe are investing in this type of flooring at the moment. Mohawk (Unilin) made the biggest step in this respect by taking over IVC (big in this type of flooring business) and thus becoming the biggest PVC flooring producer in the world and by doing this they also came into the total ownership of the Spanolux MDF mill in Vielsalm, Belgium – and Balterio flooring.
So at the end of this process, the Spanolux mill, capacity 250,000m3/year, is now owned by Mohawk, meaning that Unilin and Spano operate together as a really significant player in the market.
In the UK and Ireland we see no new investments from the three main players Norbord, Kronospan and Medite to increase capacity. With the intriguing modified fibre based Medite Tricoya Extreme Durable MDF for external use, the company is certainly making further interesting market penetration. With this in mind, oil company BP plc of London is planning to participate in the construction of the world’s first Tricoya plant for manufacturing acetylated wood chips through its holding company BP Ventures (BPV). This was announced by the wood modification company Accsys Technologies plc on 3rd Feb 2016. We understand BPV’s acquisition of a 3% stake in the Accsys subsidiary, Tricoya Technologies Ltd (TTL), has been agreed in an initial step. This involvement is to be increased significantly upon completion of the founding of a consortium, which is to include Medite Europe Ltd in Ireland.
Accsys is expecting to conclude this during the course of 2016. Strategic cooperation with BP has existed since 2012 and since then, BP has been supplying the preliminary product, acetic anhydride, to the Dutch Accsys subsidiary Titan Wood BV, which manufactures modified Accoya wood at the Arnhem (NL) facility. The planned Tricoya works is to be built in Hull, UK. This is to have an initial capacity of around 30,000 tonnes of acetylated wood chips, sufficient for producing approximately 40,000m3 of modified MDF, say Accsys.
As a consortium partner, Medite is to sell a large proportion of the modified MDF. A provisional agreement, still subject to final confirmation, stipulates that Medite will purchase up to 60% of the new Tricoya works output in future. Within the scope of the existing cooperation, we understand that Medite currently re-processes and refines solid Accoya wood, supplied by Accsys, into fibreboard and then markets it under the Medite Tricoya Extreme branding.
Accsys is also endeavouring to develop its licensing system to enable other companies to acquire distribution rights for Tricoya products internationally. In this context Accsys reports that TTL wants to intensify the existing licencing partnership with the South American wood based panel manufacturer Maderas y Sinteticos SA (Masisa) of Santiago, Chile. Masisa has held a license for the South American market since Spring 2012 and this was extended in mid-2014. The original plan to build a Tricoya wood chip plant at the Medite facility in Ireland was abandoned in favour of the new project.
Italy continues to be caught up in the challenges caused by the ongoing decline in furniture production locally (down approximately 40% since 1999). This, coupled with the construction sector’s reduction in activity as a consequence of the economic crisis, has had the result of a fall in MDF production in the last years, with only a small increase actually seen in 2015.
However, on a much more positive note from Italy, the Fantoni Group investment signals a belief and commitment to MDF for the longer term.
Turkey seems to continue strongly. With large markets available, both domestically and into the Middle East and former Soviet states, growth continues.
We can now confirm the MDF plant in Beypan Kayseri began production in late 2015. Significantly, as mentioned earlier, ongoing investments in Turkey continue, with three more plants under construction for start-up in 2016/17, bringing a further 1,120,000m3 capacity. These are Starwood Bursa, 400,000m3; Camsan Bodurlar Adapazari, 420,000m3; and SFC Kronospan with 300,000m3. It is important to note however that economic sanctions which Russia imposed on Turkey at the end of November 2015 (in response to the shooting down of a Russian fighter plane by the Turkish air force) might cause delays in the implementation of a number of wood based panel projects in Russia by the Turkish companies Kastamonu Entegre and Yildiz Entegre . We understand that both companies want to maintain their current and future investment projects in Russia, despite that worsening political climate. Furniture production trends from Poland, the Czech Republic and Romania were reported to be slightly up in 2015 – all good news for the MDF sector.
Homanit produced the first panels at its new Krosno site in Poland, on its Siempelkamp line, in March 2015. The new line is configured with a continuous 8’x28.8m press and designed for annual capacity of 250,000m3 and there is also a new lacquering and finishing line. The group also operates a 250,000m3 MDF facility at Karlino, Poland.
In the Nordic region (Sweden, Norway, Denmark, Finland and also the Baltic countries) there are now no production facilities for MDF, but the influence of a major furniture maker, in terms of global design trends in the competitively-priced self-assembly sector, remains influential and interesting. We understand that MDF will generally be used where very high quality core and faces allow detailed machining and high-quality finishing, but weight issues continue to dominate selection of materials. Also, products produced as sandwich elements (core honeycomb with surface 2.5mm or less HDF) are helpful in reducing weight in the final product. The issue of recycling MDF at the end of use remains an important topic of research in this area – still to be satisfactorily resolved.
With regard to Russia and the changing ownerships in the sector in 2014-15, respected industry newsletter Euwid and other industry experts, including WBPI’s Russia correspondent, Eugene Gerden, provided helpful commentary. We have as a result added-in the Swiss Krono Kronostar mill at Kostroma, 200,000m3, which was previously missing from the main listing. Istanbul-based Kastamonu Entegre, which purchased from IKEA the former Pfleiderer planned Novgorod mill in Russia, with a design capacity of 495,000m3/year of MDF/ HDF, is still destined to be built alongside the existing 565,000m3 mill in Alabuga, in Russia’s free economic zone, Republic of Tatarstan, one of Russia’s most economically-developed regions. The company has already entered into an engineering contract with the main technology supplier, Dieffenbacher, but currently runs the risk of a project suspension (temporarily) due to the current tensions between Russia and Turkey.
Russia has, for some time, been the centre of attention for panel investment and development in eastern Europe, but with the political sanctions now in place, trade with Russia is restricted, and while this is limiting the scope for traditional suppliers of furniture (such as Italy) to the Russian market, it is actually driving up domestic production – and demand – for furniture in the country.
As an update from last year, we understand that the Rimbunan Hijau 150,000m3/year mill actually started production at the end of 2014, but that due to raw material shortages, it is not currently running.
In Belarus, the Mostovdrev, Gomeldrev and Borisovdrev mills are up and running well. The two new mills which were under construction – investments by Kronospan at Smorgon and state holding company Lessbumprom in Vitebskdrev – are all shown in the main listing.
Also information to note, the Swiss Krono Group has undertaken a project to rename and rebrand its businesses and operations in eight countries and this is also reflected in the main listing, where appropriate.
Taking our main table listing from 2014, which showed a total installed capacity of 23,487,000m3, and then fine tuning information with adjustments and corrections and with new capacity already installed in 2015, we reach a total of 24,401,000m3. Then, with the future mills listed in Table 1, we now have a forecast figure of 26,871,000m3 as the total capacity of the European continent for 2016/17.
North America
Overall, the industry has had an improved year in 2015, with many plants operating at, or near, capacity. MDF production and sales had a good recovery in the US and Canada last year but, more recently, the North American market appears slightly over-supplied. This has caused the sector to rethink the time line and the extent and depth of the ongoing recovery. 2014 was actually characterised by tepid markets and it looks as though the sector expects only modest growth in domestic shipments this year.
Imports of Asian furniture continue and, while furniture manufacturing in North America is growing again, it appears it will be years before it returns to turn-of-the-century levels – if it ever does.
Housing starts are still improving, the remodelling market remains strong, consumer purchases are growing and hospitality sectors and manufacturing are generally on the up, so realistically, 2016 should be reasonable in terms of demand by the end of the year.
The most recent change in the North American MDF industry that we can report has been the re-commissioning and opening, about a year ago, of the MDF Mill at Pembroke, Ontario, Canada.
Formerly known as ATC Panels, Pembroke, the mill now operates as Pembroke MDF Inc, with a rated capacity of 257,000m3.
We reported last year that Georgia Pacific had acquired the wood composite, gypsum and Kraft paper assets of Temple Inland and continues to operate the MDF mills at Monticello and Mount Jewett.
All formerly-listed Flakeboard MDF mills in the US and Canada, acquired in 2012, are now re-named Arauco North America in our listings.
We previously reported that Sierra Pine and Flakeboard were in discussions with regard to the sale/purchase of the well respected Medford ‘Medite’ MDF plant, which had performed well through the downturn due to the continued success in its speciality products and manufacturing efficiency.
However, in the end, the Flakeboard acquisition of the Sierra Pine mill was not concluded, following a US Department of Justice review – the standard anti-trust review process which occurs in such cases – but mainly due to the concentration of MDF capacity in the western US/Canada region which could have resulted from such a takeover. In the end, the sale of the Medite MDF mill in Medford, Oregon was concluded by Sierra Pine to Roseburg Forest Products, Oregon in Autumn 2015.
The investment announced by Swiss Krono in the new HDF/MDF plant at its facility in South Carolina – to support its existing laminate flooring business which up to now had been based on bought-in raw materials from elsewhere – is one of the first new investments in production in the US for quite a while.
Swiss Krono, one of the world’s leading producers of engineered wood products, and its American subsidiary, Kronotex USA Holdings, Inc, announced the expansion of its existing operations in Barnwell County.
The company is investing US$230m to build an HDF mill and expand its laminate flooring production, creating 105 new jobs over the next few years.
Swiss Krono is expanding its existing Kronotex US facility in Barnwell County.
This will allow Kronotex USA to produce 300,000m3 of HDF per year for laminate flooring production and to sell to furniture, cabinet, fixture, door and other wood product manufacturers. The project will increase the company’s annual laminate flooring capacity by eight million m3.
Preliminary engineering has been completed and construction is expected to start by mid- 2016, with HDF operations to begin by the summer of 2018.
Consolidation has certainly been a theme for the North American industry over the past three years.
In Mexico, we see the three new projects we highlighted last year steadily progressing. As part of the Chilean Masisa Group, Masisa Mexico’s investment in the construction of an MDF plant, a coating line (melamine) and the expansion of the already existing resin plant in its industrial complex located in Durango, Mexico, is progressing well, with an anticipated start-up in 2016. The new MDF project, and the coating line, will have a production capacity of 200,000 and 100,000m3/year, respectively.
By investing in a local MDF manufacturing facility, the company intends to complete its production mix, reduce its costs and achieve increased logistical efficiency.
What is clear is that for the Santiago-based group, already Mexico’s largest wood panel producer and one of Latin America’s top panel manufacturers, the growing Mexican market has long been viewed as a prime target.
These new investments (as well as the purchase of Rexcel SA de CV, which manufactures and distributes particleboard and decorative laminates in Mexico) are in line with Masisa’s growth plan and consolidate the company’s leading position in a market that has attractive projections, due to an increasing Mexican domestic demand.
Masisa Mexico continues to be spearheading a project aimed in the long term at substituting Mexico’s traditional reliance on native forestry and recycled sawmill pine wood chips, shavings and fines, with a sustainable plantation resource, with a target of 10,000ha by 2018.
For Duraplay de Parral, a long-established Mexican plywood and particleboard producer, the move into MDF production with an investment in a new plant with a capacity of 200,000m3 a year, is felt to be a natural expansion.
The company signed a contract with Dieffenbacher to act as leading contractor to supervise erection and start-up of the new plant: a contract arrangement which includes four other European and US machinery suppliers. The new plant is being installed within its existing premises in Hidalgo del Parral, Chihuahua, Mexico, with production planned to start during 2016.
Duraplay says it has more than 50 years’ experience in the market of wood panels, and that with the new MDF plant, it plans to offer the broadest wood panel line manufactured in Mexico.
This investment is also positive news for all the relatively local wood suppliers, as this will ensure them the long-term sustainable harvesting of their forest.
Duraplay is funding the investment with a financial structure involving existing shareholders, the Chihuahua state government, working with a Mexico City private equity fund, alongside Mexican and international banks.
The Mexico City-based PROTeak Uno, which specialises in plantation teak and solid wood products, in 2014 unveiled a plan to establish a 280,000m3/year MDF plant in Mexico’s southeastern sub-tropical Tabasco state, utilising eucalyptus wood from plantations in the south of the country.
The company has been building the plant on a greenfield site at Huimanguillo, 67km from the state capital Villahermosa. The facility was scheduled for completion in the fourth quarter of 2015, with the complete line, including a 30m continuous CPS press, being supplied by Dieffenbacher. During 2015 PROTeak announced that it has signed a Cooperation Agreement with FINSA, the largest Spanish producer and seller of wood panels, resins, melamine and veneer, among other products, in the Iberian Peninsula. With over 80 years’ experience, FINSA owns 12 plants in Europe. The agreement includes the joint operation of PROTeak’s MDF plant, technology transfer, and the marketing of FINSA products in Mexico.
“We are very proud of this Alliance with such an experienced world class producer”, commented Héctor Bonilla, President of PROTeak’s Board. “The participation of FINSA validates, once more, the strength of our MDF Project and of PROTeak as a solid company”, he added. The extensive international experience of FINSA, its high quality standards and its adhesion to strict social and environmental standards will be a valuable factor in the successful development of PROTeak’s project: the first high-tech MDF plant in Mexico, which will start production during the second semester of this year. “This Alliance significantly shortens the learning curve that every new project has, ensuring cost, quality and production volume efficiency,” commented Omar Nacif, PROTeak’s executive vice president in charge of panels.
PROTeak has also succeeded in buying Forestaciones Operativas de Mexico SA de CV, (FOMEX), the national eucalyptus plantation business of Mexican industrial conglomerate Grupo Kuo, for a reported US$30m. That FOMEX deal now gives PROTeak FSC-certified eucalyptus plantations in Tabasco and in the neighbouring states of Oaxacap and Veracruz. PROTeak is investing around US$180m in the Tabasco MDF project overall, including the acquisition of the 8,500ha of eucalyptus forest in the state.
Apart from offering ideal growing conditions for forest plantations, Tabasco state has a well-developed infrastructure, thanks to the dominance of the oil and gas industry and the state’s location in the Gulf of Mexico.
Looking ahead, the company intends to increase its own eucalyptus plantations to at least 15,000ha, through planting and improved growth rates, over the next four to five years, which it hopes will not only secure its long-term raw material supply, but also assist in delivering its quest to become the lowest-cost producer in Mexico.
Mexican wood panel producers are now driving a number of market development initiatives, which are gaining momentum and are at the forefront of a campaign to promote wider use, particularly of MDF, by the national furniture industry.
The panel makers are continually educating Mexico’s furniture designers (both current ones and young students) and manufacturers in the potential and versatility of working with MDF which, with its workability, is a natural substitute for traditional solid wood. It has been said before and in the words of the legendary and inspirational MDF pioneer Ted Bauer, of Medford Corporation, many years ago ….… “you are only limited by your imagination with MDF”.
These three new mills will bring Mexico’s MDF production capacity up by 680,000m3/ year by 2016 – a significant change from the 74,000m3 capacity, which had been stable for such a long time.
Total North American installed capacity for 2015, is now recorded at 5,037,000m3, with more accurate numbers included, on top of 4,780,000m3 now showing for 2014.
Now, with the significant new Mexican capacity projects and the Mexican mills listed in our table showing capacity for 2016 and beyond, we have a forecast figure of 6,017,000m3 as a total capacity for the North American area, including Mexico, for 2016/17.
Business Barometer
Although we have not published a specific table for the Business Barometer this year, due to a lack of response from enough manufacturers for a meaningful presentation, information from North America shows that pricing remains under pressure due to the strong US dollar, the strong economy and imports at keen levels.
The North American business barometer also now suggests that costs are expected to rise by an average of 3-7%, based on the latest information we have. These industry value changes are a combination of increasing costs and also gradual stronger demand, allowing some gentle price recovery, eventually, across the MDF sector.
With reference to European MDF manufacturers again, regretfully, due to insufficient response to our questionnaires on this topic, it has not been possible to compile a meaningful business barometer for this huge and varied geographical region.
However, in general, industry experts suggest it certainly seems fair to report that the trend in prices for MDF could be described as slightly upward. A problem certainly remains that the total market demand for MDF across the whole region (with particular reference to the overcapacity in supplying substrate for the laminate flooring sector) is still not strong enough in total to push through and hold a significant overall price increase consistently, country by country. So we suggest that the situation in the MDF market across the European region broadly could still be reasonably described as very slowly ‘recovering’ on the overall pricing front.
How the listing was compiled.
The WBPI listings published in 2015 were reviewed and modifications made, using other published sources and data received directly from the mills and industry experts. Published information was reviewed for news of capacity changes. These sources include relevant trade magazines, association reports, press releases and equipment suppliers’ reference lists.
Self-completion enquiry forms were distributed to the mills, requesting current and future capacity data.
The mills’ own reported capacities are used wherever possible because this is the basis upon which they can make their estimates of future capacity and production changes.
Where this information is not available, published sources are used, usually on a basis of 330 operating days per year.
Conversion of ft2 to m3/year is made with 1,000ft2 equal to 1.77m3.
