The main markets for panel products – construction and furniture – have held up well over the last 12 months, which has been good news for manufacturers. Growth in consumption has been witnessed for all panel types.
“Private housing has been the driver for a lot of the growth we saw in 2018,” said Alastair Kerr, director-general of the Wood Panel Industries Federation (WPIF). “Not all sectors have fared quite so well. The commercial side of construction has been slowing and the public sector is still really struggling with the austerity measures but 2018 was predominantly a good year.”
Just under two-thirds of the UK’s overall wood-based panels consumption is satisfied by domestic production – within that chipboard is slightly higher than two-thirds, OSB is slightly lower and MDF is around 50:50. Those ratios have remained broadly similar for a while now.
While investment in OSB capacity is increasing in the UK it hasn’t been the standout panel in Europe in terms of growth over the last year. “OSB growth hasn’t been exceptional,” said Mr Kerr. “MDF has done quite well, coming from a low base in 2017 but overall they have all improved across 2018 because there has been growth across all the main markets – housebuilding, repair and maintenance and furniture.
“The shopfitting sector has been interesting because we’ve seen retail stores continuing to close but there has been a repurposing of many of those, particularly towards the catering and café culture and these still need fitting out.”
As mentioned, OSB capacity is on the rise and it doesn’t look as though the brakes are going to come on any time soon.
“These large scale investments are made with a view towards the long term and certainly the sector sees growth potential for OSB,” said Mr Kerr.
“European OSB production actually fell in 2018 but this was largely due to some production issues in Germany,” he added. “However, the trend in western and eastern Europe is one of continuing growth in OSB capacity and, of course, that will inevitably have an impact on some grades of plywoods. I emphasise ‘some’ because OSB doesn’t compete against all grades of plywood.”
According to European Panel Federation (EPF) figures, chipboard capacity in 2018 was nearly 38 million m3, while OSB capacity was just shy of seven million. That represents a 3% growth in OSB capacity on the year before and further growth is expected this year.
Focus On Value Adding
Chipboard and MDF are mature markets, so the forward trend is one of value adding. “For chipboard the biggest investments now are going into décor,” said Mr Kerr. “It’s a very fashion related business and we’re seeing some very sophisticated décor overlays with profiled surfaces.”
This is particularly apparent in products for the furniture industry, he added, but is now also being seen in overlaid construction boards.
“There are a number of added value variants for overlaid construction boards. Initially it was just the peel-clean but now there is non-slip, coatings giving added weather protection, overlaid OSBs for shutting applications and so on.”
As for in-board value adding, such as zero added formaldehyde and fire resistance, the sector has always demonstrated the speed at which it can adapt to market demands and this will not change, said Mr Kerr.
“Construction is moving more towards offsite system build and panels lend themselves very well to that environment. SIPs and fully or nearly fully finished panels being delivered to site are commonplace now. This trend will grow over time and the panels industry will respond to it, whether it be in terms of how it delivers product to manufacturers, more cutting to size, more coatings and so on.”
Brexit is still posing unanswerable questions and there’s no doubt that there is some concern that markets will stutter but, as Mr Kerr suggests, not every slowdown can be attributed to the UK leaving the EU.
“Brexit is unhelpful but you have to be careful not to blame it for everything,” he said. “If you have an eye on the global economy we are probably coming to the end of the current economic cycle, which has been on an upwards trajectory and is now showing some signs of slowing – so let’s not get too carried away.”
And regardless of the outcome, the EU will remain a major market and influencer of future regulation. Added to that, the UK will continue to follow EN standards and is “well placed to comply”.
