While other panel products have witnessed a significant turnaround in market conditions during the second quarter, chipboard has remained largely unmoved. Lead times and demand have continued stable, while at the same time there has been little or no movement in prices. And the market is expected to remain unerringly steady this side of the summer shutdown period in Europe’s production sector.
One of the leading domestic producers put up prices at the start of the second quarter and a supplier of imported board is understood to be considering an increase to take effect at the beginning of June. Several traders referred to the offer of the occasional ‘crazy’ price from companies keen to move product, but added that this was nothing out of the ordinary.
‘The market is no more than alright,’ according to one contact. ‘Everything is stable but I don’t think anybody is having a riotous time of it out there.’ Another added: ‘Our regular customers are buying what they would normally buy at this time of the year, but I don’t see much chance of a big price hike.’
Summer pricing fears
One of the sources expressed concern that the imminent summer period might see a return of ‘irresponsible pricing’ in a bid to win a larger share of a reduced market. ‘The summer always seems to be a difficult time. We spend most of our time correcting the actions of the previous summer, and then the next summer comes along.’
There was a less upbeat interpretation from another contact: ‘Oversupply is killing the price. Demand is not keeping pace with supply and we haven’t even reached the summer yet.’
Demand from the furniture sector appears to resemble the proverbial curate’s egg, with some manufacturers said to be enjoying excellent sales while others are continuing to struggle in the wake of a below-average Christmas period. Indeed, elements of the chipboard industry are questioning why a large proportion of the furniture industry appears to have missed out on the UK’s supposed retail spending boom.
The flooring market has enjoyed a far more positive start to 2002 with one overseas producer having registered record sales into the UK during April. Attributing this upturn in part to the strength of the UK construction sector.
Commenting on the situation for raw board, a producer said that production was going well and that his company has still been able to de-stock.
It was reported last month that a couple of initial offers for the Hornitex panel manufacturing empire had failed to win approval at a meeting of creditors. The two interested parties – Bridge-Point Capital GmbH and Orlando Management GmbH – are now considering whether to make an improved offer for the business, which comprises four chipboard operations in Germany.
Hornitex’s administrator Dr Werner Schreiber has since made it clear that the business is running satisfactorily and that the funding is in place to allow operations to continue until a suitable buyer is found.
Hornitex’s commitment
Other chipboard operators have expressed surprise that there have been no moves to reduce Hornitex’s commitment to chipboard. One source pointed to the fact that, unlike the bulk of its competitors, the German panel maker had ‘ignored reinvestment in continuous technology’. At the same time, the company is based in a country that continues to suffer from relatively poor economic conditions and from weak chipboard prices.
Indeed, several contacts stressed this week that, while UK chipboard prices may not be entirely satisfactory, they are still better than those prevailing in Germany and France.
Contrasting with this widespread industry desire to see a reduction in overcapacity, AS Bolderaja has confirmed that it will launch a £1.5m programme in July to upgrade and increase production at its mill in Latvia.
As for latest developments in the UK, TTJ’s previous chipboard report appeared shortly after the takeover of the George Reynolds plant in County Durham by four well-known figures from within the UK panel products industry. At that time, the resultant company – Vertex Panel Products Ltd – set out its strategy as one of maximising the potential of the existing plant at Shildon while placing particular emphasis on service levels.
In early May it launched Vertex Surefit flooring grade chipboard brand, which has entailed ‘a few modifications to process control in the factory’ as well as re-designed pack sizes and packaging, according to a senior company spokesperson.
