Changing ownership still affects industry28 June 2018
In the first part of our annual survey of the global MDF producing industry, independent consultant Geoff Rhodes looks at the MDF Mills and their capacities in Europe and North America in 2017 and at the prospects for 2018 and beyond.
In Europe, 2017 was a solid year for MDF manufacturers and Arauco consolidated its position, since entering the European wood based panel market through the new joint venture created in 2016, with its rebranded MDF facilities in Spain, Portugal and Germany.
From a raw material supply perspective there were some serious difficulties in the Iberian Peninsular as forest fires created short-term supply issues, but fortunately these have now been largely resolved.
Last year we reflected that there had been significant investment in Turkey and in eastern Europe, with several new projects being listed in both areas. Now the two Turkish MDF plants at Camsan Bodurlar and Starwood Bursa have been added to the main listing, as has the SFC Kronospan MDF facility, which is now operational in Kastamonu.
The news of all upcoming new European MDF mills is listed in Table 1, ‘European capacity development for 2018 and beyond’.
The most recent new capacity announcement comes from AGT Turkey, with Siempelkamp providing a second MDF line for the company in Antalya. Full design capacity is to be advised, but it is probably 250-300,000m3.
The new investment package also includes the delivery, installation, commissioning and supervision of the dry fibre and energy plant by Siempelkamp subsidiary Büttner. It is claimed that the connection with the first MDF line previously supplied by Siempelkamp at this location opens up numerous advantages and will primarily benefit resource efficiency.
The scope of supply includes a 7ftx55.3m ContiRoll Generation 9 continuous press, with a light-board package and a forming and press line, as well as a glue kitchen, which includes the MDF-resinated system ‘Ecoresinator’. It also includes the newly developed Eco-Sifter, which has been integrated into other new MDF plants; the cooling and stacking system; a master board sanding system; and a cut-to-size line, with the associated logistics to allow downstream panel finishing. The new plant will be equipped with the energy-efficient Servomotor ContiRoll EcoDrive, a light-board package to produce L-MDF and the innovative process control engineering ProdIQ next.
Table 1 also still includes the two investments by Yildiz Entegre of Turkey in Pitesti (Romania) and Vladimir (Russia), as well as the proposed Kastamonu Entegre mill in Alabuga, Tatarstan; the Pavlovskiy MDF mill east of the Urals; along with Altayles’ plans to build a large-scale plant to produce MDF in the Altai Krai region in Russian Siberia, bordering Kazakhstan.
MDF production and sales in North America showed continued positive recovery in 2017 and the industry again had a good production year, driven particularly in the US by a strong domestic housing market.
Weyerhaeuser’s acquired MDF facility in Columbia Falls, Montana, known formerly as Plum Creek, has been fully integrated into the company’s portfolio.
Other takeover news from North America has seen Roseburg Forest Products making a step north of the border with the acquisition of the Pembroke, Ontario, MDF mill, now coming into their ownership alongside the Medite MDF mill in Medford, Oregon.
As previously reported, the sale of Clarion Board’s HDF/MDF plant in Shippenville, Pennsylvania to Kronospan has bedded down and the investment announced by Swiss Krono for a new HDF /MDF plant at its facility in Barnwell, South Carolina to support its existing laminated flooring business, which until now had been based on bought-in raw materials from elsewhere, is still progressing. This expansion will allow Swiss Krono to produce 300,000m3 of HDF per year, which it will use for laminate flooring manufacturing; and sell to furniture, cabinet, fixture, door and other wood product manufacturers. These HDF operations are due to begin by the summer of 2018. Once completed, this will increase Kronotex USA’s Barnwell County workforce to 275.
Really interesting news is that the CalAg rice straw-based MDF plant is becoming a reality. CalPlant I,LLC as it is called, has completed financing for a US$315m plant to be built in Willows, California, with a production capacity of 250,000m3 and a start-up goal of mid-2019.
The project has been in the pipeline for more than 20 years, since the principals first shipped California-grown rice straw to England for testing. Since then, the endeavour experienced a series of ‘almosts’, until the recent successful financing, which includes US$228m of taxexempt private activity revenue bonds priced through the California Pollution Control Financing Authority, and US$87m cash equity.
A group of minority investors includes a subsidiary of Teachers Insurance and Annuity Association of America, Columbia Forest Products, Siempelkamp, and CalAg LLC.
The project stems from state legislation in 1991 prohibiting farmers from burning rice straw, the waste product of rice harvesting, as smoky haze had become an issue in the region. CalAg president Jerry Uhland, a rice farmer, joined a small venture formed by another agriculture man, Jim Boyd, in 1996 that began researching rice straw-based MDF. They were joined by Les Younie, who had worked in wood products operations and who remains vicepresident of manufacturing.
The project is expected to bring several environmental advantages, including reducing the use of water, fungicides and chemicals and a reduction in methane emissions. And obviously it provides a new recycling market for roughly 275,000 tons of rice straw annually.
In Canada, the MDF business remains truly positive, with an improving market in the last year. Prior to the Roseburg (US) takeover, the most significant news was that the recommissioned ATC mill in Pembroke, Ontario was fully operational and the West Fraser mill in Quesnel BC (which had a serious explosion in 2016) was back up and running during the first half of 2017.
In Mexico, the positive capacity developments outlined last year are progressing well, and these are reported in more detail later in this article.
Last year we suggested that a value recovery across Europe might be on the horizon, country-by-country, and this has certainly been seen in some cases, but not across all markets, as a result of varied economic and socio-political dynamics.
This year’s survey again provides listings of capacity in the two regions as at the end of 2017. We also show the changes expected to capacity during 2018 and 2019 and beyond. Total all-European installed capacity reached 26,986,000m3 in 2017, compared with 26,744,000m3 in 2016, with growth seen across Russia, Belarus and Turkey.
Most of the MDF mills continue to work hard to optimise their installations (some not running at full capacity) and are looking for continual production refinements and new product developments to maximise the opportunities that exist within their individual facilities.
In central and western Europe, we can now report that Fantoni’s investment in Osoppo, Italy, to replace the two multi-daylight MDF presses, referred to as Plaxil 4 and Plaxil 5, with a continuous 65.5m-long forming and press line (Plaxil 8) from Dieffenbacher during 2016, has progressed well and is operational. When presenting the project, Fantoni indicated an investment of around €60m, reflecting its longterm commitment to the MDF sector, both as a pioneer and as an innovator.
From Austria comes a dynamic acquisition move with Egger’s purchase of the Masisa plant in Concordia, Argentina, from the Chilean Masisa SA, successfully completed in September 2017. This is the first time Egger has had a production site outside Europe.
The group, with headquarters in St Johann in Tyrol, takes over the number two position in Argentina for a purchasing price of US$155m.
The acquisition contracts between Egger and Masisa were signed on July 17, 2017. In addition to the plant in Concordia, which has facilities to produce and coat particleboard and MDF and employs 500 people, Egger also took over the retail network Masisa Placacentro in Argentina, Uruguay, and Paraguay, which is run independently by 43 partners.
The new MDF/HDF investments in Pitesti, Romania (capacity 401,000m3) and Vladimir, Russia (capacity 424,000m3) by the Turkish wood based panel and laminate flooring manufacturer Yildiz Entegre Agac Sanayi Ve Ticaret AS, led to orders for four treating lines for the MDF/HDF mills from Vits Technology GmbH of Germany. These should be in production soon.
In France, the market appears steady and is going well. Sonae’s sale of the former Isoroy MDF facility at Le Creusot to Kronospan has consolidated. We can also confirm that the Isoroy MDF mill at Ussel, which was sold to a new investor and the factory management, is now totally privately-owned and stands alone, operating very well as Panneaux de Corrèze. In Spain and Portugal, the MDF market appears to be picking up and going better.
For clarity, and as an update from last year, Kronospan had purchased the two MDF facilities Interpanel in Benavente and Unopan in Salas (part of the Interbon group), but it has now closed the plant at Benavente and exported the equipment to Bulgaria.
It has kept the Unopan MDF facility fully operational and the capacity tables have been updated accordingly. All these moves have seen Kronospan emerge as a powerful player in the Iberian Peninsula and it now competes seriously with the long-established and locally-based Finsa group.
In Mangualde, Portugal, the two MDF lines now emerge as one positive component in the newly-formed Sonae Arauco group. Discussions are ongoing to consider new investments and upgrades. The single MDF line of Valbopan, also in Portugal at Nazaré, continues to produce its unique coloured MDF for specialised markets throughout Europe and elsewhere. Madibeira (Finsa group) has now fully installed the old Jomar particleboard line together with the MDF plant so on the site at Neles it can produce particleboard and MDF (up to 60mm thick) with the steam injection process and/or Superpan (a mix of particleboard and MDF).
With regard to Benelux, western Europe and the changing ownerships and trends, the market appears to be strengthening. We still see HDF as a substrate for laminate flooring gradually losing volume in western Europe, although in eastern Europe, Russia and Turkey this product is still growing in popularity.
The more recent trend in flooring appears to be thin vinyl flooring (PVC) – also with a click system. All the major HDF flooring players in Europe are investing in this type of flooring at present. Mohawk (Unilin) made the biggest step, as previously reported, by taking over IVC, thus becoming the world’s biggest PVC flooring producer. By doing this it also came into the total ownership of the Spanolux MDF mill in Vielsalm, Belgium and Balterio flooring. So at the end of this process, the Spanolux mill, with a 300,000m3 annual capacity, is now owned by Mohawk meaning that Unilin in France and Spano in Belgium operate together as a significant player in the market.
In the UK and Ireland there are no new investments in capacity from the three main players: Norbord, Kronospan and Medite. All have strong order books and Medite (Coillte) continues to bring new products to market.
With the intriguing modified fibre Medite Tricoya Extreme Durable MDF for external use, the company is making further interesting market penetration, competing in many cases with non-wood elements, particularly in the construction sector. Updating the news from last year we can report that in 2017 Accsys Group announced a consortium for the financing, construction and operation of the world’s first dedicated Tricoya wood chip manufacturing plant and sales facility, in Saltend Chemical Park in Hull, UK.
Construction is under way on the new Tricoya Technologies plant, after securing almost £60m in funding. The consortium behind the funding, construction and operation of the new plant comprises parent group Accsys Technologies, BP Ventures, BP Chemicals, Medite, Business Growth Fund (BGF) and Volantis. The plant has also received funding from the Green Port Growth Programme and from the LIFE programme of the EU. The factory is expected to be completed in early 2019 and will provide around 30 permanent jobs.
Accsys chief executive Paul Clegg previously said production of Tricoya wood elements had to date been on a small scale for market development feedstock derived from Accoya wood. The firm has an Accoya factory in Arnhem, Netherlands.
These acetylated elements are used to manufacture the high performance MDF panels. The panels exhibit outstanding durability and dimensional stability which allows them to be used in exterior and wet area applications once limited to products such as concrete, plastics or metals. With the added benefits of light weight, sustainable raw materials and a guarantee of up to 50 years above ground and 25 years in ground, these revolutionary panels provide architects, specifiers and designers with an entirely new construction material.
In March Accsys signed a Tricoya user licence agreement with Spain-based Finsa for the production of Tricoya. The agreement is a major breakthrough for Accsys, with Finsa set to become the second producer of Tricoya panels. Ireland-based Medite Europe is of course the other existing producer.
Under the agreement, Finsa is granted exclusive rights for manufacturing Tricoya wood elements in Spain and Portugal, with non-exclusive distribution rights in other territories. Finsa will sell the panels under the Tricoya brand and pay a combination of royalty and licence fees to Accsys’s subsidiary, Tricoya Technologies Ltd.
The supply of acetylated material for Finsa’s Tricoya panels will initially come from Accsys’s Accoya plant in Arnhem and then in the form of Tricoya chips from the new plant in Hull.
“A partnership with Finsa, a well-established company with a reputation for innovation, is a great endorsement of our proprietary technologies and the Tricoya business proposition,” said Paul Clegg.
Italy continues to be caught up in the challenges caused by the ongoing decline in furniture production locally. This, coupled with the construction sector’s reduction in activity because of the economic crisis, has resulted in a fall in MDF production in the last few years, with only a small increase seen in 2017.
However, on a much more positive note from Italy, the Fantoni Group investment detailed earlier signals a belief and commitment to MDF for the longer term. Also, as chairman of the EPF, Dott Paolo Fantoni, who has been passionate about many topics relating to the correct evolution of the MDF sector, continues with his inspirational vision and his ongoing commitment to the “Venice Declaration: The Wood Based Panel Industry and the Circular Economy” signed by the EPF and the European Furniture Industries Confederation in 2016.
In Turkey, the progressive dynamics seem to continue strongly. With large markets available both domestically and in the Middle East and former Soviet states, the growth continues. Significantly, and as mentioned previously, investments in Turkey continue with three more plants starting up in 2017. Each has been added to the main listing, bringing in further capacity. These are Starwood Bursa (616,000m3) and Camsan Bodurlar Adapazari (640,000m3) both now operational, and SFC Kronospan (452,000m3).
Furniture production trends from Poland, the Czech Republic and Romania were reported to be up in 2017 – all good news for the MDF sector. Homanit (Homann Holzwerkstoffe, Germany) is producing successfully at its Krosno site in Poland. The new line has an 8ftx28.8m continuous press and is designed for annual capacity of 250,000m3. Additional investment has gone into a lacquering and finishing line. The group also operates a 250,000m3 MDF facility at Karlino, Poland.
In the Nordic region (Sweden, Norway, Denmark, Finland) and Baltics there are no production facilities for MDF, but the influence of the well-known Swedish group IKEA remains influential and interesting in terms of global design trends in the competitively-priced self-assembly sector. We understand that MDF will still generally be used where very high quality core and faces allow detailed machining and high quality finishing, but weight issues continue to dominate the selection of materials. For certain components, MDF with a density of less than 500kg/m3, while maintaining high quality, could find favour alongside higher-density items of 700kg/m3+, for special use. Also, products produced as sandwich elements (core honeycomb with surface 2.5mm or less HDF) are helpful when weight issues need to be addressed.
The issue of recycling MDF at the end of use remains an important topic of research – still yet to be satisfactorily resolved but now evolving with the interesting pioneering developments being seen at MDF Recovery Ltd in the UK, as reported previously in WBPI.
In Russia, and with the changing ownerships in the sector in 2016-17, respected industry newsletter Euwid and other industry experts, including WBPI ’s Russia correspondent, Eugene Gerden, provided helpful commentary.
We have also updated and included the large MDF mill operated by Egger in Russia at Gagarin, which was previously missing from our published capacity tables.
We see a new investment to the east of the Ural Mountains with an MDF plant for Pavlovskiy DOK – as part of a wood-processing combine. Eighty per cent of Russia’s wood resources can be found east of the Ural Mountains. Nevertheless only 20% of the wood harvested in Russia comes from this region, while a highly modern wood based materials industry has established itself primarily in the west of the country. This is changing with Pavlovskiy DOK’s construction of an innovative MDF plant approximately 2,000km to the east of the Urals, thus opening previously unused potential.
The plant is to be built not far from Novosibirsk, close to Barnaul, an administrative centre and important transport hub and, with a population of more than 600,000, it is the largest city in the Altai region. The main equipment, ordered from Siempelkamp, will be primarily backed by energy-saving systems.
The press will operate virtually isobarically and produce boards 2.5-40mm thick. Total capacity of the new mill is unconfirmed but we understand it to be in the region of 350,000m3.
Another investment announced is by Altayles, one of Russia’s leading industry groups. The company has unveiled plans to build a large-scale MDF plant, to be built in the Altai Krai, in Russian Siberia, bordering Kazakhstan. The plant’s annual capacity will exceed 200,000m3. The company plans to produce high density panels, together with fine boards that will be specially designed for the Asian market. Investment in the project is estimated at six billion rubles (US$120m).
The Istanbul-based panel and building product manufacturer Kastamonu Entegre, which purchased from IKEA the former Pfleiderer’s planned Novgorod mill in Russia, with a design capacity of 495,000m3/year of MDF/HDF, is still we understand destined to be built alongside the existing 565,000m3 mill in Alabuga. This is in Russia’s free economic zone, Republic of Tatarstan, one of its most economically-developed regions. The company has already entered into an engineering contract with the main technology supplier, Dieffenbacher, but still runs the risk of a project suspension because of the ongoing tensions between Russia and Turkey.
For some time Russia has been the centre of attention for panel investment and development in eastern Europe but now, with political sanctions against it, trade is restricted. While this is limiting the scope for traditional suppliers of furniture (such as Italy) to the Russian market, it is actually driving up domestic production, and demand, for furniture in the country.
Updating from last year, we understand that the Rimbunan Hijau 150,000m3/year mill started production but because of ongoing raw material shortages is not running continuously.
In Belarus, the Mostovdrev, Gomeldrev and Borisovdrev mills we understand are running well. The two new mills which were under construction – investments by Kronospan at Smorgon and state holding company Lessbumprom in Vitebskdrev (a very large company comprising enterprises in pulp and paper production) – are all also now shown in the main listing as operational.
So, looking ahead for expanded capacity in 2018 and beyond in Europe as whole, we have the lines mentioned in Russia (ex IKEA) Kastamonu Tatarstan (495,000m3); the Pavlovskiy DOC mill east of the Urals (350,000m3); the Antayles investment in Siberia (200,000m3); and in Vladimir-Russia (424,000m3) by the Turkish wood based panel and laminate flooring manufacturer Yildiz Entegre Agac Sanayi Ve Ticaret AS.
Add to these the MDF investment in Turkey, which is AGT in Antalya (capacity TBA) plus Pitesti-Romania (401,000m3) and you have the up to date picture.
Taking our main table listing from 2016, which showed a total installed capacity of 26,744,000m3, and then fine-tuning information with adjustments and corrections and with new capacity already installed in 2017, we reach the total of 26,986,000m3. With the future new mills listed in Table 1, we now have a forecast figure of 28,856,000m3 as the total capacity of the European continent for 2018/19.
In North America, the industry overall had an improved year in 2017 with many plants operating at or near capacity. MDF production and sales had a good recovery in the US and Canada last year.
US imports of Asian furniture continue and, while furniture manufacturing in North America is growing again, it appears it will be some years before it returns to turn-of-the-century levels – if it ever does.
Housing starts are still improving, the remodelling market remains strong, consumer purchases are growing, and hospitality sectors and manufacturing are generally on the up, so realistically, 2018 should be reasonable in terms of demand by the end of the year.
The recommissioning and opening of the MDF mill at Pembroke, Ontario, Canada has been successful. The mill operates as Pembroke MDF Inc (now Roseburg) with a rated capacity of 257,000m3. The mill uses high quality wood fibre from the local sawmilling industry and is establishing itself in the market as a significant new player in this part of Canada.
Georgia Pacific continues to operate the MDF mills successfully at Monticello and Mount Jewett and all formerly listed Flakeboard MDF mills in the US and Canada are now renamed Arauco North America in our listings.
The Medite MDF mill in Medford Oregon (Roseburg) has operated well under its new owners in 2017. The Medford, Oregon plant is a well-run facility and the acquisition represented a key strategic move for Roseburg in its evolving composite panel business, ahead of the Pembroke, Canada acquisition.
Swiss Krono’s plans for a new HDF/MDF plant at its facility in South Carolina to support its existing laminated flooring business, which up to now had been based on bought-in raw materials, is one of the first new investments in production in the US for quite a while.
Swiss Krono, one of the world’s leading producers of engineered wood products, and its American subsidiary, Kronotex USA Holdings Inc, announced the expansion of its existing operations in Barnwell County.
The company is investing US$230m to build an HDF mill and expand its laminate flooring production, creating 105 jobs over the next few years. Headquartered in Switzerland, Swiss Krono Group’s origins can be traced back to 1966. Today, with facilities in France, Germany, Hungary, Poland, Russia, Switzerland, Ukraine and the US, the company employs more than 4,500 workers worldwide. This expansion will allow Kronotex USA to produce 300,000m3 of HDF per year, which the company will use for laminate flooring manufacturing operations and sell to furniture, cabinet, fixture, door and other wood based manufacturers. In total, the project will increase the company’s annual laminate flooring capacity by 8 million m2.
We have also learnt that the Langboard MDF mill in Willacoochee, Georgia is upgrading elements of its production facility and a further 11,000m3 was to be added to its capacity in 2017, probably operational in 2018.
In the most recent change of ownership in the MDF sector, Potlatch Corp has completed its previously announced merger with Deltic Timber Corp in an all-stock transaction, forming a domestic US timberland owner and wood products manufacturing giant.
The combined company has changed its name to PotlatchDeltic Corp and its shares will trade on the Nasdaq Stock Market under the ticker PCH.
“Today marks the beginning of a stronger PotlatchDeltic, positioned for growth,” said chairman and CEO Mike Covey, previously CEO of Potlatch. “We are thrilled to be celebrating this milestone and eager to begin integrating our business and capturing significant merger benefits. Our businesses have solid plans to deliver on our synergy commitments and provide a seamless transition for our customers and other stakeholders.”
The combined company will manage two million acres of timberlands, with approximately 1.1 million acres in the southern US, 600,000 acres in Idaho, and 150,000 acres in Minnesota. In addition, on completion of the transaction, PCH will operate eight wood products manufacturing facilities, including six lumber manufacturing facilities, one MDF and one plywood mill. In total, the combined company will have lumber capacity of 1.2 billion board feet.
There are no other consolidation moves which we have heard about, but consolidation has certainly been a theme for the North American industry over the past three years.
To complete our North American overview, in Mexico we see the three new projects we highlighted last year steadily progressing, with all becoming fully operational in 2017.
Latest news this year is that wood based panel giant Arauco is to buy Masisa’s Mexican mills in a US$245m deal which includes the MDF operation.
The deal is to include mills in Chihuahua, Durango and Zitácuaro, which comprise three particleboard lines, with an annual capacity of 519,000m3, and the 220,000m3 MDF line. The facilities also include three thermally-fused laminate (TFL) lines, resin plant and veneer line.
“This action is part of our expansion plan that aims to position Arauco as a global company,” said Matías Domeyko, Arauco CEO. “With this acquisition, we will be extending our presence in the North American panel market where we see trends of continued market growth for this type of product, focusing on residential and commercial furniture and industrial markets.”
In addition to its North American headquarters in Atlanta, Georgia, Arauco has 10 manufacturing facilities throughout the US and Canada, with an additional US$400m particleboard and TFL plant under construction in Grayling, Michigan.
It is Arauco’s second acquisition of Masisa assets this year; in September it bought two Masisa mills in Brazil.
With the theme MDF "Made in México", the recent start-ups of all three new MDF plants in the country, Proteak’s plant in Tabasco and Masisa’s in Durango, along with Duraplay at Hidaigo del Parral, the process of import substitution of MDF panels in the Mexican market has really begun.
Total nominal production capacity of the new MDF plants has been adjusted up to 735,000m3/year. The main incentive for these three companies, that together have invested more than US$400m in state-of-the-art manufacturing facilities, is the very promising outlook in the Mexican market. Until now no continuous process plants existed in Mexico and per capita consumption remains very low compared to most countries.
According to analysts, 90.5% of MDF consumed in Mexico is imported, mainly from Chile and Brazil, consequently logistics costs represent a significant percentage of the price paid by distributors. This in part explains why the Mexican MDF market is perceived as very underdeveloped in comparison to countries such as Brazil and Argentina.
In Brazil, apparent MDF consumption in 2013 reached 19.2m3 per thousand population compared to Mexican apparent MDF consumption of 4.3m3 per thousand. Also, the Mexican furniture industry is characterised by a comparatively high use of solid wood and plywood in relation to particleboard and MDF. Therefore, the perceived opportunities for the increase of MDF in the Mexican furniture manufacturing industry remain extremely positive.
Masisa has had industrial and commercial operations in Mexico for more than 10 years, developing the MDF and particleboard market for furniture, and expanding its customer base throughout the country. What is clear is that for the Santiago-based group, already Mexico’s largest wood panel producer and one of Latin America’s top panel manufacturers, the growing Mexican market has long been viewed as a prime target and now the company is to be swallowed up by Arauco.
For Duraplay de Parral, a long-established Mexican plywood and particleboard producer, the move into MDF production with an investment in a new plant with a capacity of 235,000m3/year is seen as a natural expansion.
The new plant has been installed within its premises in the northern silver mining town of Hidalgo del Parral, Chihuahua, Mexico. Duraplay says it has more than 50 years’ experience in the market of wood panels, currently producing particleboard, softwood and hardwood plywood and panels with decorative surfaces. With the new MDF plant, it plans to offer the broadest wood panel line manufactured in Mexico.
This investment is also positive news for all the relatively local wood suppliers as it will ensure them the long-term sustainable harvesting of their forest.
The Mexico City-based PROTeak Uno (Pro MDF), which specialises in plantation teak and solid wood products, previously unveiled its plans to establish a 280,000m3/year MDF plant in Mexico’s south-eastern sub-tropical Tabasco state, using eucalyptus wood from plantations in the south of the country. The new plant, on a greenfield site at Huimanguillo, 67km from the state capital Villahermosa, is now operational.
PROTeak announced that it signed a Cooperation Agreement with Finsa, the largest Spanish producer and seller of wood panels, resins, melamine and veneer, among other products, in the Iberian Peninsula. With over 80 years’ experience, Finsa owns 12 plants in Europe with 2,750 employees and annual sales of US$1,000MM. The agreement includes the joint operation of PROTeak’s MDF plant, technology transfer and the marketing of Finsa products in Mexico.
PROTeak has also succeeded in buying Forestaciones Operativas de Mexico SA de CV, (FOMEX), the national eucalyptus plantation business of Mexican industrial conglomerate Grupo Kuo, for a reported US$30m. That FOMEX deal now gives PROTeak FSC-certified eucalyptus plantations in Tabasco and in the neighbouring states of Oaxacap and Veracruz.
PROTeak is investing around US$180m in the Tabasco MDF project overall, including the acquisition of the 8,500ha of eucalyptus forest in the state. Apart from offering ideal growing conditions for forest plantations, Tabasco state has a well-developed infrastructure, thanks to the dominance of the oil and gas industry, and the state’s location in the Gulf of Mexico.
Over the next four to five years, the company intends to increase its own eucalyptus plantations to at least 15,000ha, which it hopes will not only secure its long-term raw material supply, but also assist in delivering its quest to become the lowest-cost producer in Mexico.
Mexican panel producers are driving several market development initiatives which are gaining momentum and are at the forefront of a campaign to promote wider use, particularly of MDF, by the national furniture industry.
The panel makers are continually educating Mexico’s furniture designers (both current ones and young students) and manufacturers in the potential and versatility of working with MDF which, with its workability, is a natural substitute for traditional solid wood. These three new mills bring Mexico’s total MDF production capacity up to 809,000m3/year as at end 2017 – such a significant change from the small capacity of less than 80,000m3, which had been stable for such a long time.
Total North American installed capacity for 2017 is now recorded at 5,775,000m3, building on the 5,727,000m3 recorded for 2016. Now, with the significant new Mexican capacity projects and the Mexican mills listed in our table showing capacity for 2018 and beyond, we have a forecast figure of 6,336,000m3 as a total capacity for North America and Mexico for 2018/19.
Business Barometer and Brexit Note
Following the UK’s referendum on EU membership in June 2016, the UK government initiated the official EU withdrawal process, putting the country on course to complete the withdrawal process by March 30, 2019.
Membership of the EU and its predecessors has long been a topic of debate in the UK. The country joined what were then the three European Communities, principally the European Economic Community (EEC, or "Common Market") in 1973. In a referendum in 1975 continued membership of the European Communities was supported by 67% of voters.
Time will tell what impact the 2016 vote will have on international trading and the movement of goods to and from the UK. Regarding European MDF manufacturers again, regretfully, because of insufficient response to our questionnaires on this topic it has not been possible to compile a meaningful business barometer for this region.
However, in general, industry experts suggest it certainly seems correct to report that the trend in prices for MDF could be described as continuing upward. So we suggest that the situation in the MDF market across the European region broadly could be reasonably described as ‘recovering’ on the overall pricing front.
Although we have not published a specific table for the Business Barometer this year, information from North America shows the pricing is strengthening as a result of the stronger economy and growing demand.
The North American business barometer also now suggests that costs are expected to rise by an average of 3-5%, based on the latest information we have. These industry value changes are a combination of increasing costs and gradual stronger demand, allowing some price recovery across the MDF sector