WhatWood: In 2015, competition intensified in the Russian MDF market; prices slipped
WhatWood agency has completed the study “The market of solid fibreboard and thin MDF/HDF in Russia in 2014-2015”. According to agency analysts, the output of fibreboard and MDF/HDF in the Russian market in 2014 amounted to 2.5 million m3, of which the segment of solid fibreboard and thin MDF/HDF (2-6 mm thick) made up 1.1 million m3.
Presently in Russia, fibreboard and MDF/HDF are manufactured by 27 companies. Of these, 13 companies produce MDF with a joint capacity of 3 million m3/year. Also, five projects are under implementation with a joint MDF capacity of 2 million m3/year.
The largest producers of solid fibreboard and thin MDF/HDF are Kronostar and Kronospan in the segment of MDF/HDF, Vyatka plywood mill and Lesosibirsky LDK No. 1 in the segment of solid fibreboard.
Of the total volume of exports of fibreboard and MDF from Russia, about 88% are solid fibreboard and thin MDF/HDF. By the end of 2014, the volume of exports of solid fibreboard and thin MDF/HDF from Russia amounted to 148,800 m3 (46.5 million m2) in volume terms and $49 million in value terms. The largest importing markets in this segment are CIS countries: Uzbekistan (50%), Tajikistan (17%), Kyrgyzstan (9%), while the largest exporter companies are: Ufimsky FPK (19%, 8.9 million m2), Lesosibirsky LDK No. 1 (16%, 7.6 million m2), Kronospan (14%, 6.4 million m2), Poleko (14%, 6.3 million m2).
The demand for fibreboard and MDF/HDF is closely linked to the production of furniture – this segment generates 50% of sales; the construction industry utilizes 20%. Until the recent crisis in Russia, demand was growing for laminate flooring and furniture in the middle price segment on the basis of MDF/HDF.
In general, the Russian market follows the trends of the European market: consumption of thin MDF/HDF is growing at the expense of reducing consumption of particleboard. In the next 3-5 years several new mills will reach rated capacities which can replace imports and fill the gap in the market. The active phase of product substitution will be forming.
In 2014-2015, several new enterprises were launched: Kastamonu Entegre in Tatarstan, PDK Apsheronsk in the Krasnodar region; the new line was commissioned by Lesplitinvest in the Leningrad region. New MDF lines have also opened at the enterprises of Bellesbumprom holding in Belarus, and Russia will become an important market for those mills.
As of March 2016, an MDF line of Roskitinvest in the Tomsk region is ready to launch, investments are also planned in Smolensk region, both at Igorevsky DOK and at the mill of Austrian group Egger.
Currently MDF is a weak competitor to particleboard because of high prices, low product range, long lead times and product deficit in some regions. As long as MDF supply becomes high in the Russian market, the prices will fall to the level of chipboard, and furniture manufacturers and wood processors will start to choose what material to use.
First signs of increased competition have been already noted: the dealers in the Ural region report that the launch of Kastamonu mill allowed to create competition with Kronospan, so the prices are no longer dictated so much by the sole manufacturer. According to industry representatives, the MDF market in Russia is already over-saturated: reduced demand on top of increasing competition has led to the fact that in the summer of 2015, prices decreased by 5%.
In addition, currency rate is favourable for the domestic market and exports: panels of Kastamonu from Yelabuga are shipped to China, where they compete with European and local products.
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Location of mills producing fibreboard and MDF/HDF in Russia (the diameter of the circle shows rated capacity of the mill in million m2). Source: WhatWood.