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WhatWood Global Trends Review Global Trends Review, August 05-11, 2013: Overcapacity hinders wood-based panel industry in Europe

Global Trends Review, August 05-11, 2013: Overcapacity hinders wood-based panel industry in Europe

13 August 2013 ` 16:26  

Austrian company Egger has published its outlook on the industry quoted by Holzkurier. According to Dr. Thomas Leissing, Head of Finance, Administration and Logistics, there is worldwide growth except for Europe. However, in Northern Europe and Germany, a slightly positive economic trend is expected, and the same goes for Russia, the Czech Republic and Hungary.

In Eastern Europe, the wood-based panel industry can grow only by squeezing out competitors, Leissing supposes, yet there is potential in the OSB sector. In Turkey, experts expect the housing market to stabilize on a high level. Further decline in expected in Southern and Western Europe in terms of construction this year.

With laminated particleboard, Egger was able to achieve volume growth in the past financial year, especially in Eastern Europe with Russia and Turkey as key markets.

As to laminate floors, current overcapacity brings prices down. “Until 2007, the laminate flooring market has grown considerably. But in recent years, demand in Europe has stagnated”, says Leissing.

The particleboard capacity in Europe held stable in recent years, amounting to almost 40 million m3 in 2012, according to data from the European Panel Federation. But production remained below 30 million m3. “We have an extremely large difference between supply and demand”, says Ulrich Bühler, Head of Sales and Marketing. Things are similar with MDF: 15 million m3 could have been produced in Europe last year. But not even 11 million m3 actually came off the production lines.

Consolidation within the European wood-based panels industry is poised to pick up speed again in the coming months after a brief period of calm, EUWID Wood Products says. Eastern Europe and Turkey, markets that had fared better than Western Europe last year, have seen a significant slump. The Russian particleboard market has seen a reversal in fortunes. After a long period of supply shortages last year, demand has fallen since the start of 2013 for economic reasons, helping to improve availability considerably. Particleboard and MDF/HDF producers faced a slowdown in sales in Poland, too. At the same time, import pressure from neighbouring markets has increased.

Log and lumber trade overview

After a decline in log and lumber imports into China in 2012 and early 2013, the country came back with over a 30% increase year-on-year in 2Q 2013, as reported in the Wood Resource Quarterly. The total value of imported softwood logs and lumber was over $2.2 billion. The higher demand for wood products comes as house-building activities have increased in the first half of 2013 compared to the same period in 2012. Year-over-year, investments were up 13% in residential construction and 23% up in commercial construction, according to recently published official Chinese statistics.

From January to May, Austria imported 2.03 million m3 of softwood logs. Compared with the same period last year, this results in an increase of almost 16%. The imports from the Czech Republic rose to 887,000 m3, 29% more than last year. Deliveries from neighbouring Germany declined 16% to 456,000 m3. Likewise, imports from Slovenia decreased by 25% to 136,000 m3, according to figures of Statistics Austria quoted by Holzkurier. However, imports increased strongly from Slovakia (+67% to 150,000 m3) and from the Ukraine (+101% to 91,000 m3).

At the same time, in the first five months of the year, softwood lumber exports from Austria amounted to 1.9 million m3 which represents a decline of 13.5%. According to preliminary data from Statistics Austria, 964,000 m3 went to Italy (a decrease of 23.2%). Germany imported 210,000 m3, which falls 12.1% short of last year’s volumes. Algeria reduced imports from Austria by 38.7% to 13,000 m3. On a brighter note, Japan purchased 64.3% more softwood lumber (176,000 m3). Slovenia (313,000 m3) and Croatia (47,000 m3) both boosted their imports by approximately 21%. Also Libya substantially stepped up imports of Austrian softwood lumber (15,000 m3, +71%).

From January to June, the USA imported 13.1 million m3 of lumber (+21% on-year), while the value of imports amounted to $2.3 billion (+48%). Canada is by far the largest supplier, providing 12.7 million m3 or 96% of the total volume. Yet European suppliers increased their shipments from the low base: Sweden by 358%, Germany by 39% and Austria by 867%. Average Canadian prices per m3 were $172.5, while German suppliers charged $255/m3, Austrian suppliers – $172 on the average.


Jari Celulose, Papel e Embalagens plans to restart its pulp mill in Monte Dourado in the Brazilian state of Pará at the beginning of 2014. The mill’s facility would be converted to produce dissolving pulp grades instead of paper pulp, a company spokeswoman told EUWID Paper. Several industry experts had already expected a rebuild measure at the site.

The modernisation project has already started, according to information from the company. The production of bleached eucalyptus pulp at the site in Northern Brazil has been standing still since the middle of January. The stoppage of the 410,000 tpy plant was said to have been essential due to technical problems and competitive disadvantages on the hardwood pulp market. The company’s management then examined different options allowing to maintain the site.

The current plan now aims at converting the line to the production of dissolving pulp. Jari said it could not disclose any detailed information on the project at the moment. The Brazilian newspaper Valor Economico reported that the company’s rebuilt facility would have an annual capacity of 240,000-250,000 tonnes of dissolving pulp. The investment sum is said to amount to $80-100 million.

BLE, the competent authority responsible for implementing the EUTR in Germany, has carried out unscheduled checks of Wenge roundwood deliveries to several German importers this week, EUWID Wood Products reported. BLE had previously been tipped off by the competent authority in Belgium, through which the timber was imported, as well as Greenpeace. Greenpeace believes logs in question were likely to come from an illegally assigned concession. When looking into the matter, the BLE found sings of manipulation on the certificates of origin accompanying the deliveries. The authority will now investigate whether and to what extent the affected companies failed to carry out due diligence, as required by the EUTR.

UPM has announced changes to the corporate structure in order to sharpen its operational focus, facilitate portfolio changes and drive profit growth. According to UPM, the new simplified business structure is coming into effect on 1 November 2013 and will consist of six main business areas, including Biorefining, Energy, Raflatac, Paper Asia, Paper Europe, and Plywood. The Paper Europe segment will be controlled from Augsburg in future, Paper Asia’s head office will be in Shanghai, and the group headquarters will remain in Helsinki, the company explained.

“Although the Paper Business Group has been able to improve efficiency and managed change and integration processes professionally, we now need to move into a more simple and scalable structure to improve performance further,” reported Jussi Pesonen, president and Chief Executive of UPM. This restructuring could entail changes in ownership structures, he added. The simplified corporate architecture will generate cost savings and raise profitability by €200m. At present, there are no further plans for closing down production capacity to achieve this aim. Segments in which the group plans to invest in future are biofuels, woodfree speciality papers in China, and Raflatac. The production volume is to be stepped up in existing pulp mills as well. The estimated cost of these investment projects is €680 million over the next three years, company said.

The latest Construction Purchasing Managers Index commissioned by the Chartered Institute of Purchasing and Supply (CIPS) from analysts Markit shows the building industry recovery continuing to strengthen, TTJ reported. The study showed the “rebound in activity levels in the second quarter of 2013 was maintained into July”. The survey also signalled that growth of business activity and incoming new business accelerated sharply from June: “at 57 in July, sharply up from 51 in June, the seasonally adjusted Index pointed to a robust and accelerated expansion of overall business activity in the construction sector,” it stated. Increased activity was picked up across the industry, but was strongest in residential building.

Prepared using corporate press releases, Holzkurier, Timber Trades Journal, Fordaq, EUWID Wood Products, and EUWID Paper.

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