Global Trends Review, August 12-18, 2013: Further wood processing companies increasingly competing with plastics and cheaper products

Competition in the further processed products has been intense recently. European producers of laminated flooring (EPLF) association expressed concern about competition from Chinese manufacturers in Russia in a press statement issued after their June meeting, as ITTO reported.

“It is with some concern that the EPLF is seeing the Russian laminate flooring market being flooded with mass produced Chinese goods, which also do not meet high European standards. There is a risk that these products will damage the reputation of laminate flooring amongst Russian customers. The EPLF has therefore decided to initiate a quality campaign to raise awareness of the high-quality products of European manufacturers and to distance itself from inferior cheap products”.

Meanwhile, as EUWID reported, laminate flooring is under intensifying competitive pressure from luxury vinyl tile (LVT). Made primarily from polyvinyl chloride resins and plasticizers, LVT is being heavily promoted as a versatile, relatively low cost but nevertheless “luxury” product. LVT manufacturers and retailers claim it offers good cleaning and maintenance, easy installation, good acoustics and high levels of durability. In countering the threat from LVT, the wood laminates industry is placing considerable emphasis on the relative environmental benefits of a wood-based flooring product. European laminates manufacturers now make far-reaching claims that products are made exclusively from either wood sourced from sustainably managed domestic forests, or recycled material from the timber industry. To back these claims, European laminate manufacturers are investing in Environmental Product Declarations (EPDs). Most laminate flooring manufactured by EPLF members now comes with an EPD prepared in line with the ISO14025 standard for “Environmental labels and declarations”.

Classen group, at the same time, announced that it will start installing LVT production line at its site in Kaisersesch before the end of the third quarter of 2013. Most of this technology should be installed by the year’s end; start-up is scheduled for the start of 2014. The production line is designed to have a capacity of around 5 million m2 per year in the first phase. The project will entail the Kaisersesch site switching largely to LVT flooring; the site will cease making direct-laminated laminate flooring, with these activities transferred to the Classen Industries GmbH mill in Baruth.

North American sales of thermally fused melamine (TFM) continued to climb in the second quarter after a turnaround in the first three months of 2013. Sales statistics released by the Composite Panels Association show that some 33.08 million m2 of TFM were delivered between April and June. This figure was 5% higher than the same stretch last year and 14% above the first quarter’s total.

UPM has signed an agreement on the sale of further processing operations at Kaukas sawmill in Lappeenranta, Finland, to Lännen Painepuu Oy, part of Kuusisto Group. The 11 employees of the further processing mill will continue working at UPM Kaukas sawmill with the current terms. The production of planed and pressure impregnated wood products at Kaukas will end along the sale. Lännen Painepuu will transfer the production machinery away from Kaukas further processing mill by the end of this year. ”UPM Timber has strong focus on sawn timber manufacturing. By the sale of further processing operations we are able to concentrate our resources on serving sawn timber customers,” says Mikko Hyvärinen, Director, Sales and SCM, UPM Timber. The sale of Kaukas further processing operations follows UPM’s renewed Timber business strategy announced in April 2012. UPM focuses on the development of sawmills closely integrated with the company’s pulp and paper mills.

Metsä said the Kaskinen unit had long been unprofitable despite numerous efficiency improvement measures. The company plans to close the facility after statutory labour negotiations are concluded by the end of October. Some 80 workers are affected, with maximum job cuts likely to be around 60. The facility produces upgraded sawn timber products for the Finnish market. “The possible closure will have no impact on Thermowwood heat-treated wood product manufacturing or the operation of the Kolho impregnation plant,” Metsä Wood said. “It has no impact on Metsä Wood’s upgrading business in the UK and France.”

The Egger group intends to focus on increasing its capacity to make laminated board, CPL, compact board and semi-finished products in the 2013/2014 financial year, which will end on 30 April. The company thus hopes to make itself less susceptible to fluctuations in raw material prices by increasing its backward integration. Egger is also responding to market demand for a broad range of products that can be delivered rapidly to each market by expanding its storage capacity and optimising its distribution logistics.

However, major investments in installing wood-based panels capacity are not on the agenda for now. Egger is not moving ahead with plans announced three years ago to build another OSB mill in Eastern Europe or with the possible expansion into Turkey, at least for the time being.

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Growing demand for paper in China has not only forced the country to import large volumes of pulp to supply the country’s paper machines, but also resulted in investments in new pulp production within China, WRQ reported. Because of a lack of competitively priced wood fibre in China, the two pulp companies with the largest pulp mills in the country, Asia Pacific Resources International Ltd (APRIL) and Asia Pulp and Paper (APP), are procuring much of their wood fibre needs from out-of-country sources. As a consequence, importation of wood chips to China has surged the past few years. In just five years, the import value for wood chips has increased from $180 million in 2008 to $1.3 billion in 2012, and this year the estimated import value could be close to $1.5 billion.

It has only been a matter of time before China became the largest importer of hardwood chips in the world. In the 2Q/13, China surpassed Japan with the record importation of almost 2.4 million m3 of chips. Four countries were supplying China with wood fibre the past few years, namely Australia, Indonesia, Thailand and Vietnam, with Vietnam accounting for over half of the total import volume. Average cost of imported wood chips has declined by 6% in the second quarter of 2013 year-on-year. With the continued plans to expand domestic pulp manufacturing in China it can be expected that shipments of wood chips, both softwood and hardwood, is going to increase in the coming years.

Germany’s EU Timber Regulation (EUTR) competent authority BLE has seized two of three known lots of allegedly illegal Wenge deliveries from the Congo amid on-going investigations. The timber was discovered on the premises of a sawmill in northern Germany and is currently in the process of being kiln-dried or steamed. The current stage of processing has not been interrupted, according to BLE. However, an injunction on the rights of disposal was imposed on the importers, meaning that the timber cannot be processed any further or sold. Last week it was reported that BLE found signs of manipulation on the certificates of origin accompanying several tropical wood import deliveries.

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