For all of those people in holiday mode, it is appropriate to conclude that the wet process fibreboard market is nothing to write home about.
Prices have improved to a limited degree following the closure of substantial production capacity over recent months, but the bottom line is that current price levels – while showing signs of renewed firming – are still some way short of those of a year ago.
According to one contact, the hardboard price fell the best part of 20% in the space of 18 months to two years and has failed to recover all that ground, not least because of the continuing availability of low-priced material from a variety of sources.
There was also a suggestion that a so-called ‘kamikaze war’ involving some of Europe’s manufacturers of painted thin MDF had led to ‘stagnation’ in painted hardboard prices.
Belarus was identified by most contacts as one of the key suppliers of cheap hardboard, with several contacts complaining this week that some of this material was not of the highest quality available and so was therefore tarnishing the image of hardboard in general, persuading ever-increasing numbers of customers to switch to thin MDF. ‘It is doing the hardboard market no favours at all,’ said one source.
A contact involved in selling South African hardboard said the weakness of the rand was helping sales of his product into the UK but that the market had been undermined by the very low prices coming principally out of eastern Europe. ‘The prices aren’t making us turn cartwheels,’ he said. ‘We have done some reasonable volumes in the UK, but are getting better prices elsewhere.’
Price, not demand
Another hardboard expert agreed: ‘The problem is prices – not demand. Material prices have gone up but the market won’t accept it. Customers would rather move over to thin MDF than pay more for their hardboard.’
Importer margins were being squeezed, he added, because the importers themselves had been unable, in general, to pass on higher mill prices to their UK customer base.
A contact representing Scandinavian hardboard production confirmed that the order book and volumes had been quite healthy so far this year, but added: ‘Prices haven’t bounced back to the levels we would have liked.’
Unfortunately, there are still one or two players in the market who are prepared to give board away, so prices are still not back where they were a year ago.’
Scandinavia appears to be the busiest of the mainstream hardboard-producing regions, with suggestions that lead times had been out as far as 12 weeks at one stage recently but that they have since started to come in again. ‘Things are quieter now but the first half was very busy,’ said a Finnish manufacturer. ‘We have managed to get some price increases for the second half – generally on manufactured products – and it wasn’t too difficult.’
The same contact suggested some importers had panicked at the recent loss of significant hardboard production capacity in South Wales and Latvia and had made determined efforts to ensure supplies. However, with the onset of summer, a greater sense of calm had returned to the market, he added.
Capacity closures
At least the capacity closures have given some respite to the market, although several contacts this week suggested that the beneficial effect on their own business had been short-lived and that the market had returned to a situation of normal demand and ‘not very interesting prices’.
Imperial Board Products (IBP) closed its plant in South Wales some months ago, effectively bringing to an end wet process fibreboard production on these shores. The last rites are currently being conducted on this ever-controversial business (TTJ July 21/28). The equipment at Ebbw Vale can be inspected on August 13 and 14, while sale catalogues can be obtained from Rushton International – the company which has been responsible for marketing the plant – on tel: 0161 486 6611.
The complete Sunds Defibrator plant installed at Ebbw Vale in 1995 at a cost of some £20m is being sold by tender in lots by the bailiff and joint liquidators. Speculation is rife within the hardboard trade as to what might become of this kit, with best guesses ranging from its sale to a third world country or complete break up of the kit for sale to several parties.
Quite clearly, nobody expects the plant to re-start on British soil. Rushton International’s Andrew Nagle has confirmed that, based on the level of interest when the company had been trying to sell the plant in its entirety, it was unlikely to reopen in its present position. Bids for individual items were now being sought, he said.
Several experts contacted this week claimed the plant had always been unsuitable given the market, with one going as far as to state: ‘It was the wrong size and the wrong concept completely. It was a lot of money to spend on a hardboard plant when the product itself is in its old age.’
Long-term decline
To the agreement of most people in the trade, hardboard is established on a course of long term decline. The material is produced in a high-energy using process that endears it neither to environmentalists nor to the manufacturer paying the fuel bills.
Further undermining its position, thin MDF is increasingly nibbling away at the hardboard market share because of its ease of availability from domestic sources, its ability to be easily cut, printed and painted, and the fact that it offers the user a very smooth surface on both sides. That said, there are still a certain number of applications for which hardboard remains the material of choice and this situation is expected to continue for some years to come.
Returning to capacity closures, the other major story in recent months concerns AS Bolderaja in Latvia, which decided in late April to shut its 7 million m² annual capacity hardboard mill having suspended production last November.
According to the management team, the price obtainable for its product no longer justified continued investment in the plant. Production at the site is now being focused on chipboard although, for the moment, AS Bolderaja is also buying in hardboard and performing value adding operations such as painting, cutting to size and paper overlaying.
Court challenge
A spokesperson for AS Bolderaja confirmed this week that it had officially terminated its court challenge to the EU anti-dumping levy imposed on Latvian hardboard production in the late 1990s. The company has also formally asked the EU to cancel the undertaking for a certain volume of hardboard to be sold without duty.
Latvian interests may have dropped their challenge to the EU’s anti-dumping measures but these levies are continuing to have a marked impact.
Polish producers are having to contend with an anti-dumping levy of between 9-32%, it is claimed, with the result that sales of standard Polish hardboard into the UK are almost completely ruled out, according to a UK-based spokesperson. Some Polish mills are understood to be faring better with their exports because of their ability to offer cut-to-size products which fall outside the remit of the anti-dumping levy.
Interestingly, the country currently causing consternation with its sales of cheap hardboard into the UK market – namely Belarus – had originally been included in the European anti-dumping investigation, but its name was withdrawn.
In other thinboard developments, Kronospan announced several months ago that it intended to remove the Kronolac lacquer line from its Chirk facility in North Wales and transfer it to the group’s works in Poland.
However, the situation has changed and, according to a senior Kronospan spokesperson, its destination is now more likely to be the group’s plant in China. Details had yet to be resolved and, in the meantime, the lacquer line was continuing to be operated at Chirk, he said.
Kronospan will import lacquered board into the UK in order to ensure that the product remains within its portfolio.
Market share
In terms of thin MDF, a major domestic producer reported reasonable levels of demand during July and the introduction of some small price increases. He said the product was continuing to absorb market share from wet process fibreboard, pointing to a ‘growing acceptance of thin MDF’ as a replacement for hardboard in many applications. The noticeable upward blip in summer sales was attributed at least in part to the demise of IBP.
Another leading domestic manufacturer of thin MDF confirmed that, while the product nearly always attracted a full order book, the summer period meant ‘trade is a bit slower and so prices are fairly stable’, although he suggested that a review of price levels might be appropriate later this year. Delivery times were normal for the time of year, he added.
Softboard continues to tread a familiar path although some excitement was expressed at the prospect of increased use of softboard in the timber frame market, given new part L building regulations relating to thermal performance.
According to one source, his own softboard product already conforms to the thermal performance requirements while rival OSB and plywood products do not. In addition, the softboard can be sold without breather papers. That said, he acknowledged that it was a ‘fairly slow process’ to convince potential customers as to the product’s benefits over its more familiar competitor materials.
In terms of the softboard market in general, prices have been stable for a long period and show no signs of significant movement in the near future.