The impact of the crisis on European panels

Lights and shadows for made-in-Europe panels in 2011. Slow trends, with particleboard down by 1.7 percent, mdf growing by 1.7 percent and osb up by 1 percent, are due to the crisis that is hitting furniture and construction, and to the exploitation of wood biomass for energy generation. This is the background of the latest Epf (European Panel Federation) Annual Report, the association that also includes Italy’s Assopannelli/FederlegnoArredo.

Softwood and hardwood used for energy generation increased by 0.9 and 2.8 percent respectively in 2011, with further expected expansion by 1.1 and 2.6 percent this year. In 2011, in the Russian Federation alone, pellet production increased by 80 percent, meeting the European – mostly British – demand of energy sources to fuel huge biomass plants. However, the key factor impacting the panel industry is still the international crisis. Geographically speaking, Germany remains the undisputed leader, while the focus is relentlessly shifting to Eastern Europe. This scenario is based on the figures reported by Epf for all three panel types; such estimates are based on data supplied by Epf members, complemented with the latest economic forecasts by Eurostat.

 

In 2011, the European industry of particleboard recorded 1.7 percent production shrinkage, down to a volume of 30.2 million cubic meters. These levels, still far from the 2007 peak of 37.8 million cubic meters, result from alternate market trends (positive Q1, negative second and third quarter, rally in Q4) in furniture and constructions; the latter showed significant signs of confidence and order rally in the final months of 2011. The situation differs from country to country. Finland, Germany, Hungary and Ireland suffered from lower production capacity, while Estonia and Romania closed with significant increases, driven by market rally and growing production capacity. Germany is steadily at the top of the European manufacturers’ ranking, despite a 12 percent drop last year (less than one-fifth of the production of the entire Eu-Efta European Free Trade Association area), followed by France (plus 4.7 percent) and Italy (plus 2.1 percent). Production in Poland grew by 2.9 percent, climbing up to number four. The United Kingdom was the last country in the Eu area to produce over 2 million cubic meter particleboard in 2011. On the whole, the five mentioned countries account for 59 percent of total Eu-Efta production. Spain dropped by 7.1 percent and lost the sixth position; Austria increased production by 2 percent.

Forecasts for 2012 are quite positive, the only negative projections come from Finland, Ireland and Sweden, whereby the former two are affected by decreasing production capacity; plus 10 percent is the estimated growth in Estonia, Latvia and Norway. Minimum growth rates are expected in other countries, with estimated expansion in the Eu-Efta area by 2 percent, for a total volume of 31 million cubic meters approximately.

The raw material used for the production of particleboard includes a 40 percent share of wood from industrial by-products, 33 percent of recycled wood and 27 percent of roundwood.

European import increased by 6.7 percent in 2011, while export shrank by 0.9 percent. Import represented 30 percent of consumption on average, while 34 percent of production was exported. Countries like Bulgaria, Estonia, Finland, Germany, Slovenia and Sweden were among the top particleboard importers in 2011, with opposite trends in Greece (minus 57.1 percent) and Italy (minus 24.3 percent). In 2011, total import by Epf member countries exceeded 8.4 million cubic meters, with Germany leading at over 2 million cubic meters, plus 23.6 percent compared to 2010). Other major importers were Poland, France and Sweden, with a total volume of 2 million cubic meters approximately. Sweden stood out with the most significant increase (plus 23.3 percent). Import from extra-Eu countries mainly come from Norway (plus 18 percent according to Eurostat forecasts), Switzerland (minus 1.4 percent) and Ukraine (plus 1 percent). Import from China grew by 5 percent compared to 2010, as opposed to a decrease in import from Turkey (minus 6.5 percent). For total import, a 3.6 percent increase is estimated in 2012.

For export, Denmark and Greece (plus 37 percent alone) increased their 2011 flows, unlike Finland, Ireland, Sweden and the United Kingdom. Combined export of Epf member countries decreased by 0.9 percent (10.3 million cubic meters); Austria, Germany and France are the top-three European exporters with 1.8, 1.7 and 1.6 million cubic meters respectively. Belgium, Czech Republic and Spain remained under the 600 thousand cubic meter threshold. 4 percent of particleboard production is exported outside the Eu (plus 10 percent over 2010), to the Middle and Far East, with a 4 percent increase expected in 2012. Export from Eu countries towards Ukraine and the United States increased, according to Eurostat, by 23 and 66 percent in 2011, while they tripled to Canada and grew by 4 percent to Norway. Minus 11 and minus 1.7 percent towards Turkey and Switzerland. On the whole, Epf member countries trade 1.9 million cubic meters as net exporters (619 thousand cubic meters less than in 2010); 2012 forecasts predict substantial stability.

Apparent and estimated consumption recorded a rally in the Epf area, respectively growing by 0.4 percent (28.3 million cubic meters) and 3.6 percent (28.4 million cubic meters), compared to slightly reduced stock trends in 2011. Apparent consumption in the Epf area is expected to grow up to 29 million cubic meters in 2012. For apparent consumption, Germany, Poland and Italy remain in the lead with 6.2, 3.5 and 3 million cubic meters respectively in 2011, followed by France and the United Kingdom. The fastest-growing countries are Austria, Estonia, Finland and Slovenia, while Greece and Ireland decreased. Estonia, Finland and Slovenia also lead the ranking of real particleboard consumption growth.

The production capacity of Epf member countries is stable (minus 0.8 percent at 40.3 million cubic meters). Germany further reduced its production capacity (minus 310 thousand cubic meters), which added to the closure of plants in Finland, Hungary, Ireland and Sweden; on the contrary, Romania recorded the most significant increase (plus 510 thousand cubic meters).

The main destination of particleboard is furniture, though decreasing (68 percent of global consumption in Europe versus 70 percent in 2010). The construction industry (including doors and flooring) is expected to grow by 23 percent (it was 22 percent in 2010). The remaining share is mostly used in the packaging industry. In 2011, 52 percent of production was sold directly by the manufacturing industry, 41 percent through sales channels and 7 percent in the DIY retail chain. Raw particleboard accounted for 41 percent of production in 2011, while the remaining 59 percent went into melamine-faced panels, including a 16 percent share of other panel types (fireproof or moisture-resistant).

 

European mdf panel production keeps growing slowly, with plus 1.7 percent in 2011 (11.7 million cubic meters, compared to the 2007 peak of 13.3 million cubic meters), excluding Turkey and Russia. Germany is still the first manufacturing country with 3.6 million cubic meters, followed by Poland, Spain, Italy and France. On the whole, these countries account for 68 percent of total production. On a European scale, in 2011 consumption lost 3 percent (10.7 million cubic meters). Production is mainly focused on mdf panels above 9 mm thickness and panel with 5 to 9 mm thickness, representing 92 percent of total production; the remaining 8 percent are thin panels below 5 millimeters. 56 percent are raw mdf panels, while 32 percent are melamine-faced. Fireproof and moisture-resistant mdf panels still represent a minor portion of production. Stocks have been constant throughout the year.

As relates to consumption, Germany, despite a 3 percent reduction from 2010, remains the top European mdf panel consumer (3.3 million cubic meters); United Kingdom follows with stable volumes at 1.2 million cubic meters. Third place for Poland, with 1.1 million cubic meters, plus 11 percent versus 2010, while Italy lost 5 percent and stopped at 930 thousand cubic meters, and Spain fell by 18 percent (660 thousand cubic meters). Belgium and Luxembourg expanded production, touching 750 thousand cubic meters. Greece and Holland collapsed (respectively down by 50 and 28 percent). 2012 forecasts indicate Austria as a country where mdf panel consumption will increase; on a global scale, consumption in Europe is estimated to grow by 2 percent, still remaining under the 11 million cubic meter threshold.

After remarkable 16 percent increase in 2010, mdf export by Epf members grew by another 4 percent in 2011; 6 percent of sales are related to extra-Eu-Efta countries (plus 20 percent over 2010), while export boosted to Africa (plus 26 percent), America and Oceania (both plus 59 percent). According to Eurostat, European mdf export to the Russian Federation and Turkey kept growing, up by more than 30 percent from 2010, while they decreased in South America.

Production capacity was stable at approximately 15.4 million cubic meters in 2011, with Germany continuing its reduction of mdf panel production and concurrent expansion in Poland.

Also for mdf panels, the main destination is the furniture industry (46 percent of total production, one point above 2010), especially for Italian and Czech products. France and Poland are the sources of a vast majority of mdf panels for laminate flooring, an industry that uses 37 percent of mdf manufactured in Europe (it was 35 percent in 2010). Building renovation and do-it-yourself are driving sales to the construction industry up to 7 percent, versus 6 percent in 2010. Finally, 11 percent of European mdf is addressed to interior decorations and molded panels (7 percent), garden and do-it-yourself supplies, outdoor panels, home entertainment, games and other products (4 percent).

 

In 2011, the European production of osb panels recovered by 1 percent up to 3.6 million cubic meters (versus 3.7 in 2007, the all-time high), with Germany reasserting its leading role, followed by Poland. Romania is increasing as well.

In terms of consumption, in 2011 the construction industry absorbed 50 percent of European osb production, with a 1 percent increase. Early signs of market recovery are promising further expansion for the osb panel industry in the current year. Most European production is sold within the Eu-Efta region; as relates to extra Eu-Efta areas, the Far East recorded a 50 percent increase in osb purchase from Epf member countries, and also export to the Middle East and Africa increased. According to Eurostat figures, European osb panel export to China, Japan and the United States grew by approximately 70 percent each in 2011, and also export to the Russian Federation, Ukraine and Turkey increased, respectively by 4, 6 and 7 percent.

Osb panel production capacity in Europe was stable in 2011, under the 5 thousand cubic meter threshold. In South-Western Europe, capacity expansion projects are under way. Romania is getting ready to exceed the 5 million cubic meter threshold in 2012, while a similar investment is planned in Bulgaria in 2013.

Applications for osb include the production of load-bearing panels for structures in moisture conditions (osb/3), representing 85 percent of total European production. The osb/a category absorbs 8 percent, including heavy load-bearing panels with high resistance performance for structural applications in dry and humid conditions. 2 percent is dedicated to osb/2 panels for structural and non-structural applications in dry conditions. The remaining 5 percent includes different types of special osb. In 2011, the construction industry acquired approximately 50 percent of production for applications in underflooring, cladding and load-bearing panels for walls and floors; 15 percent went to the flooring industry, 11 percent to DIY and 6 percent to packaging.

 

Italy has eighteen manufacturing sites for particleboard and four for mdf panels. In a critical economic scenario, with a spiral of recession and credit crunch, a domestic construction market still standing still (including wood-based product supplies and furniture) and export that in 2011 was still the savior of made in Italy, the wood-based panel industry is facing another period of shrinkage in 2012.

As to particleboard, domestic consumption in Italy in 2011 decreased by 9.4 percent, while import and export respectively lost 24.3 percent and 8.1 percent, negatively affecting Italy’s role of net importer. Production increased slightly by 2.1 percent, while production capacity grew by 220 thousand cubic meters. With these figures, Italy remains at number three in the ranking of European particleboard manufacturers, with a 9.8 percent share on the total. 83 percent of Italian production is addressed to industrial panel processing, mainly melamine-faced panels.

In 2011, mdf panels suffered from 5.1 percent shrinkage to 930 thousand cubic meters, with expected stabilization in 2012. Italy’s production capacity was at 1.3 million cubic meters, mainly represented by raw panels and melamine-faced panels for the furniture industry.