Pöyry Management Consulting questions whether the additional panel capacity is being built in the right place, at the right time or even to produce the right products.
“Our new market model has identified a mismatch between industry investment plans and market requirements which will lead to declining prices for some panels and markets but rising prices for others,” said Dr Cormac O’Carroll, global head of Pöyry Wood Products Practice.
“While the planned new investments all make economic sense individually, generating at least 9% IRR (internal rate of return), their overall impact will be to reduce industry profitability.”
Pöyry’s report, The Future of the Wood Based Panels Industry in Europe, says the geographic distribution of planned new particleboard capacity was not optimal. German plant investments, it argues, would be better if they led to a lower net capacity for the region.
Several of Pöyry’s particleboard demand forecasts predict periods of overcapacity and depressed pricing in some regions. But Pöyry says there will be room for further MDF capacity, as long as demand holds up.
OSB factory expansions planned are only economically feasible under Pöyry’s most optimistic market demand forecast.
Pöyry’s new central demand market forecast predicts European demand for panels will grow by 3% per year to 2020. Demand will continue to shift from western Europe to eastern Europe, with 55% of all panels being consumed in eastern Europe by 2020 (49% currently). For more details on Pöyry’s report visit www.pöyry.co.uk.
