In our previous issues, we analyzed the European and Italian markets; now we are focusing on the North American wood-based panel market. Two considerations are required to clearly define the scope of our report.
Firstly, unlike the European and Italian market, we will talk about wood-based panels, and specifically particleboard and Mdf panels, leaving the huge and variegated business of structural panels to a later report, as these panels have extensive applications in North America, especially plywood, Osb, Lvl and other solid-wood panels.
Secondly, the region of North America is comprised of Canada, the United States and Mexico, and all the countries north of the Panama Canal, including all Caribbean states. This means a potential market of more than 565 million inhabitants.
The North American industry of wood-based panels has reduced its capacity by 25 percent from the great recession of 2005 until today. The number of production sites has fallen from 233 to 171 in just a bit more than 10 years.
Just a few figures to illustrate the particleboard industry, traditionally focused on applications in the furniture business and related segments. In 1994, global particleboard production amounted to 52 million m³ approx., with Germany in the top position with 8.6 million and a 16.5 percent share, followed by the United States with 7.6 million cubic meter and 14.6 percent of global production. Twelve years later, in 2006, global production had increased to 85 million cubic meters (plus 65 percent), recording the same percent growth of the entire North American market, producing 12.2 million cubic meters.
It’s interesting to make a comparison with European market production (EU 27 + non-EU27), which in 2006 amounted to 47.8 million cubic meters, 56.2 percent of global production.
Today, according to capacity forecasts in 2018, new plants under construction should bring global production up to 108 million cubic meters, of these 10.1 in the North American market. As a result, in 12 years, the North American particleboard market has seen a 17.2 percent reduction in production volumes, always speaking on PB production. It’s also interesting to notice that all particleboard producers in the United States in 2006 were domestic companies, with one Spanish/Portuguese producer (Sonae-Tafisa) and a German company (Kunz) in Canada, and a Chilean company in Mexico (Masisa).
Developments from 2006 until today have been amazing: the particleboard industry has completely transformed in terms of production capacity and technological innovation, mostly thanks to non-North American companies.
Several acquisitions have been finalized in recent years, and now we see a real invasion by foreign companies penetrating the North American market. Chile-based group Arauco has already acquired four production sites and in 2018 they will commission a new huge plant in Grayling, featuring the world’s biggest continuous press with a capacity in excess of 800,000 cubic meters annually and a total investment above 325 million Usd.
Another peculiarity is that two Austrian companies have decided to build greenfield factories, which had not happened since 2001, so more than 17 years without any greenfield site in the United States. We are talking about Kronospan Group’s new plant in Alabama and Egger Group’s site in Lexington; the latter has also recently finalized the takeover of Masisa’s plants in Concordia Argentina. All of Masisa’s production plants in Mexico also changed owner, acquired by the other Chilean group Arauco. The lack of greenfield sites for 17 years is quite peculiar, due to a negative economic situation for sure, but also to low propensity by American industries to upgrade their plants. Unlike Europe, where the transition to continuous presses has been substantially completed, in North America only 15 lines out of 48 are equipped with a continuous press. The only vendors of continuous presses in North America are the German giants Dieffenbacher and Siempelkamp, which opened their North American subsidiaries over 35 years ago. Also in this case, American manufacturers of traditional presses, very popular in the 70’s, 80’s and 90’s, were not able to convert their business to new technology.
We can say that this type of panel, made from wood submitted to a process of refining and dry pressing, was born in the United States, while particleboard has German origins. Just like particleboard production, also the Mdf (Medium density fibreboard) panel market was affected by the American crisis that broke out in 2007. However, there were huge differences in terms of production and new investments. In 2006, global Mdf production amounted to 47 million cubic meters, while North American production totaled 5.7 million, equal to 12 percent; in the same year, European production (EU 27 + non-EU 27) was almost three times bigger at 15 million cubic meters. Let’s compare this figures with current forecasts for 2018, 12 years after 2006. This will be the first year when global Mdf production is exceeding particleboard; according to forecasts, capacity will top 108 million cubic meters, almost 50 percent in China alone, 27 percent in Europe and just 5 percent in North America, equal to 6 million cubic meters approximately.
Also for Mdf panels there are several foreign companies operating in the North American market, with interesting investments in production. As a result of several acquisitions, the Chilean group Arauco is going to become the biggest Mdf panel producer in North America, with two sites in Canada, one in Mexico and four in the United States, achieving a total capacity beyond 1.7 million cubic meters annually. New investments include a production line in South Carolina built by the Swiss group Swiss Krono.
Proatek Group is launching a new plant in Mexico, and after 15 years of investigations, an innovative plant in California will use rice straw as raw material.
We can close this report with a positive opinion about the North American market of particleboard and Mdf. After years of stagnation, many new plants are arising and market expansion is supporting new developments. Mexico is a new frontier for Mdf panels, with three new plants just commissioned. As we said at the beginning, a potential market with over 565 million people and strong US currency has supported a strong recovery of production as well as of wood-based panels import.
Both for particleboard and for Mdf, the arrival of new groups in North America has shifted the market balance significantly and new production technology using continuous presses is gradually replacing outdated plants.
All these developments suggest that recession has definitely ended and the next three to five years promise big news and more investments in this industry.
In the next article we will analyze the South American market, then we’ll go back to North America to investigate the plywood, Osb, Lvl and solid-wood panel market.
by Riccardo Ferrari