Major players expanding

Most of those manufacturers are looking around six years ahead, banking on continuing growth in the region's developing panel markets, and still hopeful of sustained economic recovery in the developed world.

One of the most surprising - and significant - plans to surface was Chilean panels group Masisa's scheme to invest US$132m in a major expansion of production in Mexico: The Santiago-based group means to build a 200,000m3/year MDF plant in 2015 at its existing panel production site in Durango, north west Mexico. It will also add a new low-pressure laminating line and expand the resin plant.

The project, part of the group's strategic regional investment programme for Chile, Brazil and Mexico, follows on from its US$54m acquisition of rival Mexican board maker, Rexcel last year, which made the Chilean group the biggest panel player in Mexico.

This represents a strategic commitment to a country in the region with big potential panel demand, still largely reliant on imported MDF, and located just a border away from the huge, rapidly-recovering US market.

Another company set on expansion, with significant plans at home and abroad, is the leading Brazilian panel manufacturer Duratex, one of the world's top producers.

Not only is Duratex planning what will be Latin America's biggest wood panels complex for 2017, but later it aims to install Colombia's first continuous medium density particleboard (MDP) line.

The São Paulo-based group, which in January took formal control of Tablemac (one of Colombia's two local panel makers) with an 80.62% stake, will launch a major forest expansion programme there. To feed the new board line of some 300,000m3/year capacity, Tablemac needs to increase its planted forest base of about 6,000ha by perhaps 30,000ha, according to Duratex.

In contrast to the raw material challenge in Colombia, Duratex now has ample wood supply for its greenfield panel complex, which is soon set to take shape in the western region of Brazil's Minas Gerais state.

Duratex inherited substantial planted forest there from its 2009 merger with Satipel and, through a recent deal, now has a total of 74,000ha of pine and eucalyptus plantation, capable of supporting both the new plant and the group's existing Uberaba panel mill. Overall, Duratex forestry has 107,000ha of leased woodland across the state's Triangulo Mineiro district.

The massive industrial project will see two big Siempelkamp ContiRoll panel lines, one with a 77m press, and each capable of turning out at least 700,000m3/year. They will be erected in parallel to cut costs. The first line is due on stream in the second half of 2016, with the other starting up in 2017.

Last year, Duratex's chief executive Antonio Joaquim de Oliveira told WBPI the firm had ordered the two lines and planned to dedicate the site's first line, with 700,000m3/year output and a 38.7m press, to MDP. It would launch the bigger, 750,000m3/year unit, to produce MDF, in 2017.

However, it is clear from the firm's latest announcement in March 2014, that Duratex is set to revise that programme, probably with an eye on the competition. It is delaying a decision on which product to produce first, probably following the announcement by its Brazilian rival Berneck which intends to launch a massive 840,000m3/year MDP line to the south by July next year.

Board finishing is important in the plan to satisfy market demand beyond 2017, so the new Duratex operation is to include three low pressure laminating lines and an impregnator, the firm has announced.

This year, Duratex is already starting work on the huge, US$550m, Minas Gerais project, preparing infrastructure to support its industrial complex to be located on a 150ha plateau within its Novo Monte Carmelo forest farm.

In line with Duratex's group-wide policy, its new complex will be one of the lowest-cost panel operations in the world. It will have the lowest known average distance between forest and mill, at just 35km, when both board lines are running, Duratex pointed out.

The scheme will strengthen the Brazilian group's overall panel output, adding over 1.4 million m3/year, or 34%, to its current capacity. That will take the total to 5.6 million m3/year. Duratex says its big investment in expansion is essential to supply the market after 2017.

Beyond that, the Minas Gerais complex allows for further growth, with space expected for a third sizeable panel line when the market requires it.

Last year, Brazil's domestic panel market grew by a relatively modest 5.6% compared with 2012, according to figures released by the Brazilian Panel Industry Association ABIPA. But this increase was strong when seen against the year-on-year 2% growth in the nation's GDP.

In 2013, Duratex reported volume growth of just 1.3% for its wood division, though prices were maintained and it saw its EBITDA rise by a healthy 20.3% for the year.

The group is committed to an expansion strategy, through both organic growth and acquisitions, in the dominant wood division and its expanding Deca bathroom fittings business.

Duratex has earmarked a total of almost US$212m in its overall capital expenditure budget for 2014 including maintenance and forest planting, together with possible regional acquisitions by Deca.

The group has already begun preparing the ground for a further expansion project in Brazil: in 2012, the company's managing board gave the green light to investment of US$150m to develop a forest base and construct a panel mill to serve the country's fast-developing northeastern region.

"We aim to find the best projects for Duratex to invest in. The group is in a solid financial state and the shareholders want it to grow," commented Duratex's then business development director Roberto Szachnowicz last year.

"Antonio [Joaquim de Oliveira] has a very challenging goal, so we need to grow through new businesses. They don't have to be in the wood side. We're looking at Deca as well."

The executive, who left the group early this year for a post in the automotive sector, made clear that Duratex continues to seek further wood division acquisition - or merger - opportunities across Latin America.

Apart from Tablemac, Duratex is weighing up the value of proceeding with several other potential projects in Colombia in the shorter term. South America's Andean Region, which includes Colombia, Ecuador and Peru, with low panel consumption, remain attractive future prospects for the group, which is seeking a suitable merger or acquisition rather than a greenfield development.

Another country with promise, longer term, is Argentina, although Duratex closed down its Deca manufacturing operation there and pulled out last year, frustrated by constant political interference in business by the Kirchner government.

Last year, the group said it was completing a comprehensive business plan for Latin America but in the end, new foreign expansion will rely on suitable acquisition opportunities emerging at the right time.

Meanwhile, another major regional player, the Chilean forest products giant Arauco, completed its MDF expansion in Brazil with the 2013 start up of its 500,000m3/year second line at Jaguariaíva in Paraná state and has just relaunched the Nueva Aldea plywood mill in Chile, which was destroyed by fire in 2012.

But this year, Arauco's panels business will certainly have turned its attention to North America, where it has its work cut out following a flurry of acquisitions. With the deal it signed in January to acquire three US plants from SierraPine, the Chilean group now has 10 facilities in Canada and the US.

Arauco will be preparing to integrate its latest acquisition with those of the Flakeboard and Moncure mills purchased in 2012 and must be considering a programme of modernisation and essential investment there.