The disappearance of some high-profile hardboard production – notably that of Imperial Board Products (IBP) in South Wales and Bolderaja in Latvia – has had an impact on the UK market. Some key players are talking in terms of shortages and of a price increase around the corner, although such confidence in the material’s medium-term prospects is by no means universal.Meanwhile, a price increase has also been reported for hardboard’s chief rival – thin MDF. According to an announcement from Kronospan in mid-November, prices of all its MDF products will increase by around 10% from the start of December on the back of a more positive supply/demand picture. The announcement had generated ‘some positive vibes’ in the market place, according to a senior figure at Kronospan.
Although nothing had been confirmed at the time of going to press, at least one of the other two domestic MDF producers was also considering a move on prices for December shipment in the face of ‘reasonable’ business levels. There was now ‘pressure to recover some of the lost value on MDF,’ TTJ was told this week.
As for the prospect of rising prices in the hardboard sector, one leading UK-based specialist suggested prices had been firming over the past couple of months and that lead times had been stretched out slightly longer than normal for the time of year at between four to six weeks. At the same time, a leading importer of Baltic hardboard said activity had been reasonably healthy despite the generally gloomy economic forecasts.
No renaissance
However, nobody is pretending that current conditions signal a renaissance for hardboard or even necessarily a substantial upturn in overall demand. Instead, the market appears to be feeling the effects of a restriction of supply following, notably, the closure of IBP and the curtailment of hardboard production at Bolderaja.
Furthermore, the relative strength of the domestic economy in Russia has meant that the country has been exporting less hardboard to the West at low prices.
Furthermore, there has been a suggestion that Belorussian hardboard – identified as one of the cheapest on the market – has not been arriving in the UK in anything like its previous volumes, while countries hit by anti-dumping levels are still struggling to make exports to the UK a viable prospect. For example, a contact handling Polish hardboard lamented that the price was already higher than that for similar material from other countries – even before the addition of the EU‘s 11.4% anti-dumping duty. ‘Export to the UK just isn’t going to happen, especially when the same material can be loaded on a truck and taken next door to Germany,’ he said. ‘Prices in Poland would have to come down a lot for a comeback in this market, but costs in Poland are also going up – it’s not a cheap producer country any more.’
An importer of South African hardboard was somewhat more upbeat given the 10-15% weakening of the rand in relation to the pound over the past three months. UK interest in standard, painted and tempered hardboard from South Africa had grown during the latter part of the year and the order book was now healthy through until April next year, he said.
Dwindling supply options
The same contact also noted the dwindling number of supply options for hardboard users and commented: ‘On standard board, there are only a limited number of people able to offer large volumes. We have had quite a few importing companies coming on the phone to us in the last six months.’
He added that prices on some higher-value items would be put up by around 5% in the first quarter of next year on the basis of the healthy order book. A similar increase was envisaged on imported Finnish hardboard as a result of increased demand for standard products and rising production costs. There was also a report that a hardboard mill in Scandinavia was adding an extra shift although this was attributed solely to an upturn in local demand.
One leading market player said the better match between supply and demand was a sure sign that ‘the market is sorting itself out’. He believed the number of companies able to offer hardboard had reduced substantially in recent years and would fall further in the next decade or so. ‘We are selling more than we’ve ever sold because the market is polarising,’ he added. ‘There are only a few options for those people who need to specify hardboard for its particular attributes.’
In the shorter term, the same contact envisaged an across-the-board price increase for Baltic hardboard of around 5% from the start of next year. Shortages had begun to emerge in October but prices had yet to filter through to the market because most contracts were renegotiated on a quarterly basis, he said.
The suggestion of hardboard ‘shortages’ and rising prices was greeted with scepticism in certain quarters. Having admitted to being ‘baffled’ at the lack of impact from production curtailments and closures, one experienced trader insisted: ‘When we want something, we are having no real difficulty in finding it at reasonable prices.’
Hardboard mills were attempting to push prices higher to cover increasing costs but the market remained ‘very competitive’ with no sign of easing in the first quarter of 2002. ‘The hardboard market has been contracting and may have reached a plateau,’ he said, ‘but there is still a tonne too many rather than a tonne too few.’ According to his own market analysis, the summer lull had continued through September and trade had not resumed in earnest until October. Activity had returned to reasonable levels but only certain pockets could be described as busy, such that he anticipated resistance to price increases except in cases where a specific product was required to meet a specific need.
Another UK source pointed to a growing lack of confidence in the construction sector over the course of this year and said activity levels had clearly been on the wane even before the shock of the terrorist attacks of September 11. The effects had first been felt on mainland Europe ‘but it’s here now too’, he said. This disquiet was translating into project delays and altered buying patterns, TTJ was told this week.
IBP equipment sale
The fate of the IBP wet process fibreboard operation at Ebbw Vale continues to excite comment despite production having ceased some time ago. A tender sale in September found buyers for a large proportion of the available infeed, fibre preparation and fibre wash equipment, but handling and sawing plant is still up for grabs, it was confirmed this week by Andrew Nagle of Rushton International, the company responsible for organising the sale. A buyer had been found for the former IBP grain line but a two-metre paint line was still available, he added.
For reasons of confidentiality, Mr Nagle declined to reveal the names of any buyers but said some were well-known names in the hardboard sector. The bulk of the equipment had been sold to overseas buyers although some sales were for use in the UK and Ireland.
Mr Nagle also confirmed that, at the outset, he had received expressions of interest in buying the entire processing operation as a single entity, but no viable offers had been forthcoming. According to Mr Nagle, this reflected the contraction of the hardboard market and the incursions made by thin MDF since Imperial was built at a cost of £20m in 1995.
To inspect remaining plant at the IBP factory, call Rushton on 0161 486 6611.
Turning to news from AS Bolderaja, the company has moved to strengthen its presence in the hardboard market seven months after confirming that it is halting hardboard production at the mill in Latviato concentrate on chipboard. A spokesperson said that the company had bought the assets of painted hardboard company Griva-B which went into receivership in August. Bolderaja previously held a minority stake. Starting early next year, the intention is to buy hardboard from other producers for further processing and onward sale. Most will go to eastern Europe, although some product is expected to come to the UK. ‘Getting hardboard off the open market and further processing it is better than having a loss-making hardboard production facility,’ said the spokesperson.
Also on the news front, Masonite Europe announced in September that it was getting out of standard hardboard – as well as Korlite fibreboard and MiraTEC exteriors – in the UK, Belgium and Netherlands markets. The company will concentrate on its door component business. Former Masonite sales manager Paul Worsley is now acting as agent for the other products as Worsley Forest Products.
In some ways, the softboard market mirrors hardboard. Demand and price levels for expansion joint filler and insulation board materials are relatively static, although some mills are reportedly considering a push for higher prices early next year to meet increasing power, fuel, labour and raw material costs.
‘It’s a case of getting something just to stand still,’ said one industry operator.
Encouraging levels
Meanwhile, a softboard spokesperson reported an encouraging level of interest from the timber frame sector in the light of the new Part L of the Building Regulations. BBA testing approval is being sought for softboard as sheathing to help develop sales in this market.
Bitumen board is sold widely in Scandinavia as a sheathing material owing to its thermal capacity characteristics, light weight, ease of cutting and lack of cold bridging. And it has already been used in a number of major projects in the UK.
