We began our survey last year by saying that 2009 was the year when “dire economic conditions finally caught up with capacity development in the MDF industry”.
Short-time working and mill closures – temporary or permanent – marked the industry’s year.
Unsurprisingly, 2010 did not show any marked improvement in sentiment among producers and costs of wood raw material, resins, energy, and transport of course, continued to rise inexorably.
This 2011 survey again provides listings of existing capacity for MDF in Europe and North America as at the end of 2010. Furthermore, drawing upon a range of sources, including the industry itself, it is hoped to show the changes expected to capacity during 2011, 2012 and beyond.
The survey continues to be published in two parts, as we have done for several years now; the second part will deal with the ‘Rest of the World’ and will be published in the August/September issue of WBPI.
The author and the editor remain grateful to all those organisations that took the time to complete our online enquiry form; and to all those other industry professionals such as panel equipment suppliers, trade associations and trade journals 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. As a reminder to those considering their input for part two of our survey – or the upcoming particleboard survey – you can make your submission at www.intermark.plus.net where you will find the necessary forms.
European capacity
As predicted in our survey of 2009, published in the June/July 2010 issue, European capacity did exceed 20 million m3 (20,261,000m3).
Capacity in Europe showed a 6.4% increase at end-2010 over end-2009.
This was in spite of the capacity reduction of 180,000m3 following the closure of the Pfleiderer plant at Nidda as that company tried to deal with its massive debt repayment problems.
Many mills continued short time working and extended closure arrangements, which influenced effective capacity.
Given the lack of new investment in the founding EU 15 countries, and the sluggish market conditions generally during the past year, the capacity there remains static.
However, as reported in recent years in our surveys of both MDF and particleboard, it is mainly in Russia and Turkey where capacity is rising.
In the former country, this is not so surprising, given that there is an abundance of wood supply available to new capacity projects. In the case of Turkey, which has to import wood chips for its panel manufacture, it does not seem such a natural development.
Perhaps this growth in capacity is best explained by looking at the other end of the cycle, as it were.
Turkey is at the gateway to the Middle East, and to many fellow Muslim nations, and this gives it a considerable market for its panel products which is largely not addressed by other countries.
Despite a drop of 110,000m3/year in Turkish capacity shown this year – as a correction given to us by yildiz Entegre – capacity is set to grow by a further 795,000m3/year up to 2012.
On the plus side, yildiz Entegre has announced a new mill in Mersin, on the south coast of Turkey, with a capacity of 495,000m3/year.
Meanwhile, another major Turkish panel manufacturer, Kastamonu, has also announced new capacity, this time of 420,000m3, in Adana, also on the south coast, east of Mersin.
Given the industry’s problems with soaring costs, this must be where the operators consider transport and raw material costs will be the lowest for a few years to come.
In fact, the surge generally on the continent of Europe is now in low-cost production, in the east.
Hence we are seeing that the major new announcements are for Belarus, where Gomeldrev OJSC is building a mill with annual capacity of 165,000m3.
Also, OAO Mostovdrev is building a new factory with an annual capacity of 230,000m3/year.
Then there is the planned Kastamonu line, of 475,000m3/year, to be built in Russia at Kazan in Tataristan. This is due to come on stream in March 2012.
Kastamonu has also built another new line, this time in the Ukraine, with a capacity of 300,000m3/year, which started production in March of this year.
Kronospan is also building a line in the Ukraine, with a capacity of 240,000m3/year.
Future changes in Europe
To date, there are no known permanent mill closures planned for 2011 and Table 1 shows the listing of all changes for 2011, 2012 and beyond.
From the foregoing information it is apparent that Kastamonu remains the manufacturer to watch, with three further mills planned in 2011 and beyond in Turkey, Ukraine and Russia.
Given that economic conditions are still far from perfect, it remains possible that some of the above projects which have not yet started production, or are not imminently expected to start, will be postponed or cancelled.
Table 2 summarises the impact of this new capacity, and minor capacity adjustments in the European regions, from 2010 to 2012.
The decline in capacity in the original EU 15 countries continues and this group of countries is expected to only represent 48.2% of total market share for Europe by 2012.
Other EU, Turkey and Russia all show increases in market share to the same date.
Also by 2012, Turkey and Russia will account for more than one third of total capacity in the region.
North American capacity
The picture in North America is as weak as we reported in our survey last year, with just one addition. That is at Uniboard in Moncure, with a capacity of 400,000m3/year, which went into production in 2010. This was a delayed opening, as anticipated in last year’s survey and a transfer from its La Baie operation.
The rumoured reopening of the Clarion Boards Pembroke mill has not yet been confirmed in the panel industry press or from any other source.
Any advances which may be made appear to be pegged-back by increasing transportation and raw material costs.
Looking ahead, there are no further changes reported for 2011 or 2012.
Table 3 gives a complete breakdown of the capacity in Mexico, the US and Canada from 2008 to 2010 and shows a fall of around 16% between 2008 and 2009 for the region as a whole; and a 4% ‘recovery’ in 2010, solely accounted for by that Uniboard mill.
Business barometer
Table 4 shows the 2010 index as ‘100’ and the 2011 and 2012 results for North America show the trends, rather than statistical precision.
However, it does underpin the view in the business barometer that prices may well rise by an average 7 or 8% during 2011/2012 if capacity increases that fast. The industry expectation of price changes is entirely driven by costs, so it is not surprising that both selling prices and costs are anticipated to rise.
It is also not surprising that production is expected to show a very modest increase, in the light of current – and apparently anticipated future – poor demand in North America.
Regrettably, insufficient data was returned by European manufacturers to compile a meaningful business barometer for that region. However, it seems reasonable to expect that similarly lack-lustre figures would apply to that region as well.
How the listing was compiled
The WBPI listings from 2010 were reviewed, and modifications made, using other published sources and data received directly from the mills.
Published information was reviewed for news of capacity changes.
These sources included relevant trade magazines, association reports and equipment suppliers’ reference lists.
Self-completion enquiry forms were distributed to the mills in both Europe and North America, requesting current and future capacity data. Other questions were asked about non-standard production, future production rates, price movements and cost changes. The form was also posted on a special website.
The mills’ own reported capacities are used wherever possible because this is the basis on which they make their estimates of future capacity and production changes. Where this information is not available, published sources are used, usually on the basis of 330 operating days per year.
Conversion of ft2 to m3/year is made with 1,000 ft2 equal to 1.77m3.
