Looking ahead for expanded MDF production capacity in 2018 and beyond in Europe as whole, the line-up includes: in Russia (ex IKEA) Kastamonu Tatarstan (495,000m3); the Pavlovskiy DOC mill east of the Urals (350,000m3); the Antayles investment in Siberia (200,000m3); and in Vladimir-Russia (424,000m3) by the Turkish wood based panel and laminate flooring manufacturer Yildiz Entegre Agac Sanayi Ve Ticaret AS.
Add to these the MDF investment in Turkey, which is AGT in Antalya (capacity to be announced) plus Pitesti-Romania (401,000m3) and we now have a forecast figure of 28,856,000m3 as the total capacity of the European continent for 2018/19.
North America
In North America the industry overall had an improved year in 2017 with many plants operating at or near capacity. MDF production and sales had a good recovery in the US and Canada.
US imports of Asian furniture continue and, while furniture manufacturing in North America is growing again, it appears it will be some years before it returns to turn-of-thecentury levels – if it ever does.
Housing starts are still improving, the remodelling market remains strong, consumer purchases are growing, and hospitality sectors and manufacturing are generally on the up, so realistically, 2018 should be reasonable in terms of demand by the end of the year.
The recommissioning and opening of the MDF Mill at Pembroke, Ontario, Canada has been successful. The mill operates as Pembroke MDF Inc (now Roseburg) with a rated capacity of 257,000m3. The mill uses high quality wood fibre from the local sawmilling industry and is establishing itself in the market as a significant new player in this part of Canada.
Georgia Pacific continue to operate the MDF mills successfully at Monticello and Mount Jewett and all formerly listed Flakeboard MDF mills in the US and Canada, are now re-named Arauco North America.
The Medite MDF mill in Medford Oregon (Roseburg) has operated well under its new owners in 2017. The Medford, Oregon plant is a well-run facility and the acquisition represented a key strategic move for Roseburg in their evolving composite panel business, ahead of the Pembroke, Canada acquisition.
The investment announced by Swiss Krono for the new HDF/MDF plant at its facility in South Carolina to support its existing laminated flooring business, which up to now had been based on bought-in raw materials, is one of the first new investments in production in the US for quite a while.
Swiss Krono, one of the world’s leading producers of engineered wood products, and its American subsidiary, Kronotex USA Holdings Inc, announced the expansion of its existing operations in Barnwell County. The company is investing US$230m to build an HDF mill and expand its laminate flooring production, creating 105 jobs over the next few years. This expansion will allow Kronotex USA to produce 300,000m3 of HDF per year, which the company will use for laminate flooring manufacturing operations and sell to furniture, cabinet, fixture, door and other wood based manufacturers. In total, the project will increase the company’s annual laminate flooring capacity by 8 million m2.
We’ve also learnt that the Langboard MDF mill in Willacoochee, Georgia is upgrading elements of its production facility and a further 11,000m3 will be added to its capacity in 2017, probably operational in 2018. In the most recent change of ownership in the MDF sector, Potlatch Corp has completed its previously announced merger with Deltic Timber Corp in an all-stock transaction, forming a domestic US timberland owner and wood products manufacturing giant.
The combined company has changed its name to PotlatchDeltic Corp and its shares will trade on the Nasdaq Stock Market under the ticker PCH.
The combined company will manage two million acres of timberlands, with approximately 1.1 million acres in the southern US, 600,000 acres in Idaho, and 150,000 acres in Minnesota. In addition, upon completion of the transaction, PCH will operate eight wood products manufacturing facilities, including six lumber manufacturing facilities, one MDF facility and one industrial plywood mill. The combined company will have lumber capacity of 1.2 billion board feet, making it a leading producer in the US.
The new company will have more than 1,500 employees and will serve over 200 customers.
To complete our North American overview, in Mexico the latest news this year is that wood based panel giant Arauco is to buy Masisa’s Mexican mills in a US$245m deal, which includes the MDF operation.
The deal is to include mills in Chihuahua, Durango and Zitácuaro, comprising three particleboard lines with an annual capacity of 519,000m3 and the 220,000m3 capacity MDF line. There are also three thermally fused laminate (TFL) lines, a resin plant and a veneer line.
In addition to its North American headquarters in Atlanta, Georgia, Arauco has 10 manufacturing facilities throughout the US and Canada, with an additional US$400m particleboard and TFL plant under construction in Grayling, Michigan.
It is Arauco’s second acquisition of Masisa assets this year. In September it bought two Masisa mills in Brazil.
With the theme MDF “Made in México”, the recent start-ups of all three new MDF plants in the country, PROTeak’s plant in Tabasco and Masisa’s in Durango, along with Duraplay at Hidaigo del Parral, the process of import substitution of MDF panels in the Mexican market has really begun.
Total nominal production capacity of the new MDF plants has been adjusted up to 735,000m3/year. The main incentive for these three companies, that together have invested more than US$400m in state-of-the-art manufacturing facilities, is the very promising outlook in the Mexican market. Until now no continuous process plants existed in Mexico and per capita consumption remains very low compared to most countries.
According to analysts, 90.5% of MDF consumed in Mexico is imported, mainly from Chile and Brazil and as a result, logistics costs represent a significant percentage of the price paid by distributors. This in part explains why the Mexican MDF market is perceived as very underdeveloped in comparison to countries such as Brazil and Argentina.
In Brazil, apparent MDF consumption in 2013 reached 19.2m3 per thousand population compared to Mexican apparent MDF consumption of 4.3m3 per thousand population. Also, the Mexican furniture industry is characterised by a comparatively high use of solid wood and plywood in relation to particleboard and MDF. So, the perceived opportunities towards the future increase of MDF in the Mexican furniture manufacturing industry remain positive.
Masisa has had industrial and commercial operations in Mexico for more than 10 years, developing the MDF and particleboard market for furniture, and expanding its customer base throughout the country. What is clear is that for the Santiago-based group, already Mexico’s largest wood panel producer and one of Latin America’s top panel manufacturers, the growing Mexican market has long been viewed as a prime target and now the firm is to be acquired by Arauco.
For Duraplay de Parral, a long-established Mexican plywood and particleboard producer, the move into MDF production with an investment in a new plant with a capacity of 235,000m3 per year is felt to be a natural expansion.
The new plant has been installed within its manufacturing premises in the northern silver mining town of Hidalgo del Parral, Chihuahua, Mexico.
Duraplay says it has more than 50 years’ experience in the market of wood panels, currently producing particleboard, softwood and hardwood plywood and panels with decorative surfaces. With the new MDF plant, it plans to offer the broadest wood panel line manufactured in Mexico.
This investment is also positive news for all the relatively local wood suppliers, as it will ensure them the long-term sustainable harvesting of their forest.
The Mexico City-based PROTeak Uno (Pro MDF), which specialises in plantation teak and solid wood products, previously unveiled its plans to establish a 280,000m3/year MDF plant in Mexico’s south-eastern sub-tropical Tabasco state, using eucalyptus wood from plantations in the south of the country. The new plant, on a greenfield site at Huimanguillo, 67km from the state capital Villahermosa, is now operational.
PROTeak announced that it signed a Cooperation Agreement with Finsa, the largest Spanish producer and seller of wood panels, resins, melamine and veneer, among other products, in the Iberian Peninsula. With over 80 years’ experience, Finsa owns 12 plants in Europe with 2,750 employees and annual sales of US$1,000MM. The agreement includes the joint operation of PROTeak’s MDF plant, technology transfer and the marketing of Finsa products in Mexico.
PROTeak has also succeeded in buying Forestaciones Operativas de Mexico SA de CV, (FOMEX), the national eucalyptus plantation business of Mexican industrial conglomerate Grupo Kuo, for a reported US$30m. That FOMEX deal now gives PROTeak FSC-certified eucalyptus plantations in Tabasco and in the neighbouring states of Oaxacap and Veracruz. PROTeak is investing around US$180m in the Tabasco MDF project overall, including the acquisition of the 8,500ha of eucalypt forest in the state. Apart from offering ideal growing conditions for forest plantations, Tabasco state has a well-developed infrastructure, thanks to the dominance of the oil and gas industry, and the state’s location in the Gulf of Mexico.
Mexican wood panel producers are driving several market development initiatives, which are gaining momentum and are at the forefront of a campaign to promote wider use, particularly of MDF, by the national furniture industry. The panel makers are continually educating Mexico’s furniture designers and manufacturers in the potential and versatility of working with MDF, which, with its workability, is a natural substitute for traditional solid wood. These three new mills bring Mexico’s MDF total production capacity up to 809,000m3/year as at end 2017 – such a significant change from the small capacity of less than 80,000m3, which had been stable for such a long time.
Total North American installed capacity for 2017, is now recorded at 5,775,000m3, building on the 5,727,000m3 in 2016. Now, with the significant new Mexican capacity projects we have a forecast figure of 6,336,000m3 as a total capacity for North America and Mexico for 2018/19.
