Domestic producers of thin MDF are set to push through price increases for September on the back of rising raw material costs but, at the same time, there appears little scope for an upward movement in the price of wet process fibreboard.
MDF manufacturers pointed this week to a significant increase in the cost of methanol as one of the major drivers behind the planned price increase. Upward price momentum was also being assisted by the swift increase in the plywood price, it was suggested. MDF was starting from “a savagely low base” and “recovery of lost value” would be a constant factor in the months ahead.
According to one manufacturer, all MDF product prices would be increased by 3-3.5% for September while a review of prices after the summer holiday period would possibly lead to another rise for October. “We are pretty fully booked and demand is strong,” said a senior company figure.
Another of the ‘big three’ domestic manufacturers confirmed the introduction from September of a 4-6% increase across the company’s MDF product range. Demand has remained “quite buoyant” over the summer and bargain prices had been avoided, a spokesperson said.
New line at Clonmel
The supply/demand balance has been helped to some extent by a planned production loss at Weyerhaeuser Europe Ltd’s factory in Ireland to allow for the replacement of its Washington Ironworks press with a new continuous press line. Also on the supply side, Kronospan confirmed that it would be implementing a “three to five days” shutdown in August for planned maintenance.
By contrast, the hardboard market is lacking a similar boost from its supply/demand fundamentals. From the supply perspective, this year has seen Hornitex Werke halt production at its lone hardboard production facility in Germany while Atex of Grafenau, also Germany, ceased production at the end of June after filing for insolvency owing e50m. However, such events have done little to improve the market.
Summer business in the UK was described this week as “patchy”, “generally quiet” and “barely steady”, not least because of the disruptive impact of the Jubilee Bank Holiday and the football World Cup. Mill holidays in July and August prompted several contacts to talk of material shortages before quickly adding the caveat that buying had remained very much on a “hand to mouth” basis. At best, demand was seen as “reasonably good” for “smallish shipments for prompt delivery”.
Cheap material
There has been little prospect of prices waking from their apparent slumbers given that, as one source put it, “there is always material to be found somewhere that is cheap”. With markets elsewhere in Europe also affected by holidays, mainland European producers have been taking an even greater interest than normal in the UK, with good offers said to have been coming in from Iberia, France, Finland and Estonia among others. Belarus and South Africa were also identified as sources of cheap offers, while several contacts noted the apparently imminent arrival of low-priced hardboard from South America.
Producers and sellers of South African hardboard have been taking advantage of the rand exchange rate to achieve a substantial upturn in UK sales. According to one interested party, “we have sold a lot more commodity board this year and our prices have firmed by 5-6%”. But he added: “There is a ceiling on the hardboard market, so we will be happy if we can get another 5% by the end of the year.”
A spokesperson for a Finnish hardboard manufacturer suggested his company would be looking for a 5-6% price increase across all hardboard products from October. “With MDF going up, we just feel the time is right for hardboard prices to be put up. Prices are far too low and I doubt there is any money being made on 8×4 3.2mm.” After a summer of disruptions to both supply and demand, the September order book was “quite encouraging”, he added.
Another hardboard expert agreed that the product “has been sold far too cheap” and that companies consumed by thoughts of market share had “left money on the table”. He added: “I see scope for higher prices and they are much needed. The market could tip into under-supply if it suddenly gets busier.” He believed any price increases were likely to be limited to a few percentage points, even though an increase of up to 30% was required to get the market back to where it was at the time of the hardboard anti-dumping procedures of the late 1990s.
