For some years now all the talk in terms of expansion in MDF, and to some extent particleboard, production has centred on China.
Then, in 2005, the Chinese market went relatively quiet for the European complete-line machinery suppliers and most thought it was likely to stay that way for a while. However, in 2006, Chinese panel makers again became active, with five or six new continuous mills being built. Orders for 2007 are coming in and it is generally expected that a similar number of mills to 2006 will be ordered this year and next. These are chiefly MDF/HDF rather than particleboard, which is also against the trend expected two years ago; it seems particleboard is not as readily accepted in China and its stubbornly low price is also a problem.
Meanwhile, the trend within that fibreboard capacity growth is towards thin board - often HDF for laminate flooring substrate. People frequently ask: "Where is the 'next China' going to come from?" The answer, it seems to me, is that there probably won't be 'another China' in terms of large numbers of mills being built in one country, or even one region. As Part 1 of our MDF survey in this issue shows, development is now more widespread. Areas of Europe are experiencing quite strong growth in capacity. Western Europe has been relatively quiet in terms of new-build, while Turkey added 420,000m3 with a new-build and an extension and will add more in 2007. So will Hungary and Poland, while in 2008, and beyond, Poland, Russia and Turkey (again) feature. Meanwhile, in South America there is a lot of activity, with the world's biggest continuous press to be built at Duratex in Brazil, a small new MDF mill in Chile and four MDF production lines being supplied to Mexico and Brazil by SWPM of China (News, p10). As Richard Higgs points out (see p20), Brazilian companies Satipel and Berneck also plan continuous MDF lines for 2008 production and Fibraplac, Arauco and Masisa all have plans for Brazil. The next issue of WBPI will cover this region in MDF Part ll. So you could say that 'the next China' is already here - in parts of Europe and in South America for instance - and I suspect that kind of more scattered expansion of the world MDF industry will be the pattern for the future, with no one country or region dominating as China has in the recent past. The controlling factor going forward must be the wood resource and that is an increasing problem worldwide, either due to paucity of supply, or because of fierce competition between paper producers, energy generators, biofuel synthesisers and the most sustainable users of all - wood products manufacturers.  

Each year the final year students of my university organise an international tour to celebrate the end of their formal training and to see, firsthand, some wood processing operations. This year we had a very enjoyable tour in South Africa.   I enjoyed all the visits, but the highlight for me was the visit to Global Forest Products' (GFP) plywood factory at Sabie because it had recently invested in Raute's latest peeling technology. I saw the new lathe peeling four to six logs per minute - it was mesmerising and incredibly fast. The logs were approximately 2.5m long with diameters ranging from about 25 to 45cm.   The high throughput is due to the combination of Raute's Smart Scan and Smart Peel equipment. At any one time there are three logs in the lathe: one is scanned to determine its geometry; a second, which was scanned previously, is waiting to be placed in the lathe; the third is the log that is currently being peeled.   Accurate and optimal positioning of the log maximises the value of the veneer cut from it. Logs are not round or straight, so the first pieces of veneer are waste. Only once the knife has cut the log in to a perfect cylinder will a continuous ribbon of veneer be produced. Where this cylinder is placed within the log determines the quality and quantity of veneer.   The quality of the veneer changes as the lathe peels the log. The outer wood is 'mature' and tends to have few knots, so this veneer is ideal for the faces of a plywood panel. The incidence of knots tends to increase as the log diameter is reduced by the knife because the tree trunk would have sported branches when its diameter was small. These branches tend to die off, or are removed by silvicultural practice, as the tree grows and this is why the mature wood has fewer knots.   The minimum diameter you can peel to is dependent on the size of the 'chuck' used to hold the log. In terms of veneer yield it makes sense to have a small chuck, but this increases the risk of chuck spin-out, where the chuck turns but the log does not.   The chuck used by GFP has three parts; a central chuck and two outer concentric rings. All three are first pushed into the log ends thus giving a chuck with a large diameter and minimal risk of spin-out. As the log diameter decreases the outer rings retract to allow the knife to continue cutting.   Although I had taught my students the principals of peeling and other aspects of panel manufacture, there is no substitute for seeing something firsthand!  

Nowhere is the Brazilian market's very good health more apparent than in the MDF segment, where Brazilian producers, among them particleboard suppliers, have lined up to announce a string of fresh MDF capacity expansion projects. Even the mature local market for particleboard showed signs of new life late in 2006. It was stimulated by a buying spree among better-off low income consumers, by rising MDF prices and by a clever image makeover focusing on the 'new-look' particleboard, now relabelled and sold as 'medium density particleboard' or MDP. However, dark clouds are gathering on the horizon of this glowing panorama as Brazil's panel makers face a fight to secure adequate raw material supply to feed their ambitious industrial schemes. Growing competition between forest products groups and biofuel crop farmers for scarce land in key states is threatening to limit the latest panel mill expansion. Panel manufacturers are trying to reinforce their own forest holdings, planting and firming up supply contracts, chiefly in the states of Paraná, São Paulo, Minas Gerais and Rio Grande do Sul. Last year, two particleboard suppliers revealed they would each venture into MDF production early in 2008. Berneck SA has ordered a 340,000m3/year Siempelkamp ContiRoll press line to install at its plant near Curitiba in Paraná, while São Paulo-based Satipel Industrial Ltda plans to follow with the launch a 300,000m3/year Siempelkamp line at its plant in Uberaba, Minas Gerais state. Further south, a relative panel sector newcomer, Fibraplac Chapas de MDF Ltda, was set to start up its second 180,000m³/year Siempelkamp line in Glorinha, Rio Grande do Sul state, at the close of 2006. Meanwhile, the industry was watching for the Chilean group Celulosa Arauco y Constitución to announce plans for a second MDF line in northern Paraná and waiting for a second Chilean group, Masisa SA to confirm its outline for a new 350,000m³/year plant, also in Rio Grande do Sul. Arauco, which aims for 50,000ha of plantations in Brazil to feed future growth, has been in joint venture talks with pulp/paper giant Stora Enso over forest and a sawmill in Paraná which Stora Enso just bought from International Paper. Then, the bombshell ! Brazil's leading panel maker, Duratex SA, sprung a surprise by unveiling plans to launch a big 500,000m3/year MDF line beside its pine-based unit in Agudos, São Paulo state, by 2009. It is in this region that forest land resources have been under greatest pressure. "We didn't know Duratex would have enough wood in the state to produce that amount of MDF. It was quite a surprise !" admitted Roberto Sczachnowicz , Satipel's commercial vice-president. Such a large capacity addition threatens to destabilise the Brazilian MDF market, but other producers feel sure that experienced Duratex will not want to "destroy value" in the market by flooding it with MDF from 2009. Players are confident that, within a couple of years, a market, currently growing by up to 300,000m3 each year, will surely have absorbed all the new capacity the latest schemes are adding. There may be some adjustment time in 2009 when the big new Duratex line is launched, and some excess capacity, but MDF's appeal will see the slack soon taken up, according to Mr Sczachnowicz. Early in 2007, MDF capacity in Brazil stood at 1.7 million m³/year, while particleboard remains strong with around three million m³/year in the market. The Brazilian industry, determined to optimise the use of its limited base raw material, is making a widespread switch from pine to eucalyptus to increase its fibre yield. Satipel is just one producer committed to changing species in its valuable forest plantation resource in the state of Minas Gerais. When it first came to the state it acquired an area of some 51,000ha of largely mature pine forest which it has been cutting and replacing with eucalypt. Following the lead of Brazil's top eucalyptus-based panel manufacturer Duratex, Satipel was keen to maximise yield and has concluded from market research that customers are less concerned about the species used than with the quality and price of the panels. Brazil's panel manufacturers' association ABIPA, in its latest annual review, predicts that the sector will see a growth spurt up to 2010 with proposed investments in the next three years totalling some US$800m. That includes a plant capacity increase of around 40% and the expansion of forest plantation. Last year, the organisation's director Rosane Donati reported that MDF capacity remained stable over the past three years but, based on new projects expected by 2010, more than one million m3/year should be added to producer capability in the coming three years. Brazilian consumption of the board, which increased by just 2.1% during 2005, was expected to soar by more than 20% with imports picking up the extra demand, she said. Listing new capacity projects, the ABIPA report included a new MDF plant being considered by Arauco and a scheme being studied by Satipel to modernise and duplicate its 200,000m³/year particleboard multi-opening press line at its southern mill in Taquari, Rio Grande do Sul. Overall, panel production in Brazil is estimated to grow from around 4.3 million m³/year in 2006 to some 5.2 million m³/year by 2009. Much of the growth will come from MDF, with its capacity set to soar to between 2.7 and 3.5 million m³/year by 2010. But the future growth and success of the panel industry in South America's biggest country now depends on how it resolves the current raw material shortage. Panel makers have been experiencing the ill effects of dwindling forest reserves for several years, resulting from a period, decades ago, when the federal government halted its tree plantation incentive scheme. Few new plantations were created and now there is a lack of mature wood to feed today's huge demand. This problem has been exacerbated in recent months by the global energy crisis and the worldwide search for 'eco-friendly' biofuels. The federal government in Brazil is promoting the growth and use of biofuels such as biodiesel from soya beans - and sugar-based bioethanol. Brazil also recently signed up to a bilateral agreement on the development of ethanol use. The result has been a vast expansion in sugar cane and soya cultivation across Brazil, leading to a squeeze on available land and a hike in its price for other potential buyers. Rising natural gas prices in Brazil, and the 'green revolution', have added to the raw material problems experienced by the forest products industry. Power generation companies are switching to biomass for their fuel, putting pressure not only on the limited forest resource, but also devouring valuable supplies of waste wood. "Today, with the growth of new power generation plants using biomass, it's not easy to buy waste [material] like pallets from the market. The cost of gas has meant companies like Cargill [agro giant] burning biomass for drying, for example soya," explained Pablo Rossler, production director of MDF producer Masisa do Brasil Ltda in Paraná state. The latest difficulties mean cost-conscious panel companies in the worst-hit states are faced with the uneconomical prospect of shipping wood from ever more distant forest locations. For firms in Paraná, that means bringing more material between 200-300km from, say, its southern neighbour Santa Catarina state. In Masisa's case, cost savings can be made by using rail. Another new dimension to the complex panel industry picture is the rise in the number of Brazil's plywood companies planning to enter MDF production. At least two of them are said to be ready to take advantage of low-cost Chinese technology to launch MDF plants with lines of more than 100,000m³/year each. The traditional barrier to entry into the hitherto rather exclusive Brazilian MDF producers' 'club' may no longer be what it once was.

As part of a wide range of industrial activities, the MDF business of Guangdong Weihua Holding Co Ltd has assumed increasing importance in the portfolio of this privately-owned group - which was publicly listed on the stock exchange at the end of 2006 - since it started production on its first MDF line in 1997. The MDF products are all branded 'Weilibang' and the factories all have characteristic entrance gates in which a tiled circular column on the right hand side represents the tree, while a series of tiled rectangular panels on the left represent the wood based panels produced. That first MDF line, Meizhou Weilibang, was built 10 years ago in Meizhou City in Guangdong province in the south of China - a province famous for its furniture producers. Meizhou lies about five hours' drive from Guangzhou City, in the east of the province. The machinery was provided by Shanghai Wood Based Panel Machinery Co Ltd (SWPM) and the single, nine-opening, press line has an annual capacity of around 70,000m³. Weihua's second MDF line, Zeng Cheng Weilibang, was built in 2001 in Zeng Cheng on the outskirts of Guangzhou City. This line has a 15-opening press, again from SWPM, and a capacity of 120,000m³/year. Both these lines have a press platen size of 4x16ft (1.22x4.8m). For line three, Weihua turned to European suppliers and selected German company Dieffenbacher as the main supplier for everything except raw material preparation. The refiner came from Andritz and line capacity is 200,000m³ from a 28.5m continuous CPS press. The location selected for this line was Qingyuan, 45 minutes drive north of Guangzhou, and production started in 2004 (WBPI August/September 2005, p46). Line number four was again awarded to Dieffenbacher, with another CPS press, although a shorter one this time at 18m, giving a capacity of 120,000m³/year. The refiner was once again from Andritz and the mill, Taishan Weilibang, was built in Jiangmen City, about 90 minutes' drive southwest of Guangzhou. It started production in October 2006. This is the line which WBPI visited this year and we will return to it later for a more detailed look. For line five, at Yanchung between Guangzhou and Maoming, Weihua reverted to domestic supply for the machinery, again awarding the contract to SWPM. This project, which went into production in late March this year, has a 12-opening press and, for the first time in one of Weihua's Chinese-sourced lines, has an Andritz refiner. Annual capacity is anticipated to be in the region of 200,000m³ of MDF. So we can see that between 1997 and 2007, Weihua has built five new MDF lines, but it does not stop there. Three more lines are already well on the way, with site work already commenced. One is, for the first time, outside Guangdong province - a long way outside. Located in Liaoning province in north east China, the mill will have a Siempelkamp ContiRoll continuous press line with Andritz refiner. At the time of my visit to Taishan in late March the contracts for Liaoning had already been signed, the land purchased and ground work commenced. The 23.8m ContiRoll was due to commence production at the end of 2008 with a nominal capacity of 200,000m³, producing HDF for furniture manufacturers. Meanwhile in Qiu County in Hebei province, near Beijing, another Dieffenbacher CPS press line, but this time with a Pallmann refiner, is also under construction, to the same schedule as Liaoning and the same 200,000m³ capacity for HDF. The third new project is also under construction, this time in Xiangfan City, Hubei province. It is another Dieffenbacher CPS line with Pallmann refiner (Weihua wants to compare the performance of its Andritz and Pallmann refiners) and is again of the same capacity and on the same schedule as the other two new lines, with the same product in mind - HDF. When all these lines are up and running, the eight Weihua mills will have a combined annual design capacity of around 1.3 million m³, making it a very significant player in the Chinese MDF/HDF industry. The obvious question was why the company decided to build three mills simultaneously. Mr Lu Chuan Feng, vice general manager of Taishan Weilibang Wood Industry Corporation Ltd explained that Mr Li Jianhua, chairman of the Weihua group, wants to make his company one of the top 10 producers in the world. "Also, according to our analysis, the market here will still be good for the next five or six years and I don't see any problem in selling the extra capacity," said Mr Lu. "At this moment, we have to worry more about the raw material than the market." Mr Lu went on to explain that the reason for the wide geographical spread of the Weihua mills is down to two factors - the wood supply and the market - with the main market for all the mills being furniture and thin board. "All our factories are quite close to both the raw material and the market," he said. The developing trend for overseas furniture manufacturers to set up factories in Guangdong province must help demand for MDF/HDF, but Mr Lu said that the company also plans to export part of its production and is already active in the Middle East. "All the mills are using a mixture of wood, but principally eucalyptus," said Mr Lu, who admitted that local wood supply was not plentiful around Taishan and that the wood has to be brought in. "However, the group has its own plantations and every line has a forestry company planting eucalyptus," he said. The Qingyuan mill has a short-cycle press line for overlaying with melamine papers, made by a Chinese manufacturer in Guangdong province, and this has a capacity of 1.2 million m². "This is the only [value adding] line in the group and we do not plan to have any more," said Mr Lu. "We have decided we have enough capacity and there are a lot of smaller sub-contractors carrying out short-cycle pressing anyway." Each Weihua factory has its own resin plant and so will the three new lines, all producing resins to E1 and E2 standards. So far all the capacity development of the Weihua group has been in MDF or HDF, not particleboard, but Mr Lu said that the company may consider particleboard production in the future. In view of the shortages of wood supply generally in China, I asked Mr Lu what he thought about the future for wood based panel production in the country. "Many of the producer companies have planted a lot of trees and I think that will solve the problem," he said. Recently there has been much discussion in the international financial press about the removal of tax concessions for some manufacturing companies in China and Mr Lu acknowledged that Weihua has benefited from special tax concessions on all its sites and tax-free imports of German machinery. "The new regulations to remove these tax advantages will negatively impact our business," he conceded. There have been a lot of new mills adding a lot of capacity to the market in China in recent years and I asked Mr Lu how Weihua distinguishes itself from the competition. "We are planning to produce more thin board because a lot of Chinese lines make only thicker panels and I believe we are the only company that can make 2.2mm for example," said the vice general manager. Thin board, he explained, finds a market in furniture, gift boxes (a big market in China) and in car and ship interiors. "The current market is good, with the best price being for thin board at the moment," said Mr Lu. "We have been in this business for 10 years now and so we have the experience, the people and good technology - and a very good sales team centred on Guangzhou."

The three concurrent exhibitions were held between March 20-23 in three halls at the Pudong expo grounds, although one of those 'halls' was a temporary marquee-type tent structure outside the main exhibition buildings. Total exhibition area was stated as 27,000m². A seminar programme ran for three of the four days of the exhibition, although in fact the exhibition was reduced to nearer three-and-a-half days as packing up of the stands commenced soon after lunch time on the final Friday, even though it was not scheduled to close until 4pm. The organisers, China International Exhibitions Ltd, part of the Allworld Exhibitions Alliance, claim that 16,946 'qualified visitors' passed through the gates during the fair, 13% of whom were from overseas. There were 340 exhibiting companies from 16 countries and regions. Several of the exhibitors interviewed for this report said that they had met potential customers from South East Asia, South Asia, Russia and the Middle East (notably Iran) as well as customers in China and most seemed pleased with the show. Shanghai Wood Based Panel Machinery Co Ltd (SWPM), exhibiting with the other Chinese suppliers in Hall 4, felt the show had been worthwhile. It was promoting its daylight press lines for MDF and particleboard and its short-cycle lamination lines, all of which are commonplace in the Chinese panel industry's factories, often 'alongside' imported continuous press lines. Sufoma, another prominent manufacturer of press lines in China, also exhibited there. Hall 5 was the location for the European machinery suppliers and, whilst a number of the more prominent companies were exhibiting there, several were notable by their absence, reflecting the fact that most see the WM Fair, held in Beijing in even-numbered years, as the more important show for the panels sector. Swiss sander manufacturer Steinemann reported a fairly brisk show with a number of 'old friends' from China as well as overseas visitors. The company has had considerable success in the Chinese market, notably in mills which have equipped themselves with European continuous press lines. Sia Abrasives also reported a good show. The Swiss company has a joint-venture workshop in Guangzhou where it joints narrow abrasive belts for the furniture industry and punches discs. It also has a warehouse for products from Switzerland. "Business is increasing year on year, but this is a very challenging market in terms of quality and competitiveness," said Philip Ngai of Guangzhou sia Abrasives Co Ltd. GreCon from Germany was very pleased with the interest in its products for quality control and spark detection, with its China area manager Roman Lichomski describing it as "the best Shanghai show ever for us". The company was promoting its latest product for flame and spark detection in presses, with manual control of the extinguishing possible. However, on-the-line quality control/measuring technology has some way to go yet in the Chinese market. Another German company, SHW, was presenting its bulk materials discharging and handling systems for areas such as chip storage, while Grenzebach offered its veneer drying technology. Michael Bischof of Siempelkamp said that thin HDF/MDF lines represent the trend in China today and suggested that 70% of production was below 6mm on new continuous lines. Recent contracts for Siempelkamp include Senlan Woodworking Timber Co Ltd in Lishui, Fujian province, which has a 23.8m ContiRoll press under installation and due to start up in October this year. Luyuan in Guangdong has an identical line due to start up at the same time and both lines will have a nominal capacity of 175,000m³/year. Weihua Liaoning bought another line identical to those two and this is scheduled for installation in early 2008 (see p37). This active market has surprised most observers after a quiet 2005. "We expect over the longer term there will be about five new continuous lines annually," said Mr Bischof. Siempelkamp has had a workshop in Wuxi since 2005, employing 110 people and making complete forming lines and fibre bins for the Chinese and export markets including Canada. "The quality is the same but the cost is less," pointed out Mr Bischof. He also said that Dare Wood, which already has four continuous lines in production, is set to double its overall capacity in the next five years. Electronic Wood Systems (EWS), also from Germany, is represented in China by Eurochina, as are fellow German companies Maier and Anthon. "We have received 10 orders a year for the last four years for our on-the-line measuring and spark detection equipment," said EWS' founder Hans Peter Kleinschmidt. Anthon, Germany, manufactures large sawing systems and Mr Metzger, head of sales, said it had sold about 20 angular plants in China so far, with five on order this year alone. "And we have had two serious enquiries at this show," he said. "China is the second most important market for us," said Thomas Dietrich of Maier, which makes chippers and flakers. "We have sold 30 knife ring flakers in China to date." The company offers three sizes of knife ring flakers - 1200, 1400 and 1600 and has found that the smaller size is popular on the Chinese market. It was also promoting its two-stage OSB strand production system and reported a lot of interest at the show. Dieffenbacher has had the most success in China among the European continuous press makers and sales director Georg Rahm said the market continues active, with four contracts received in 2006. These were for Shengda MDF in Chengdu, Sichuan, Dongdun HDF in Anhui province, Dare in Maoming (thin HDF) and Hebei Ying Yang particleboard. This year, Dieffenbacher had, up to the exhibition, received orders from Weihua for a thin HDF line in Hubei and another in Hebei. "We are getting a lot of MDF/HDF line enquiries at the moment after a 'rest' in 2005," said Mr Rahm and we expect a similar number of contracts in 2007 as we had in 2006. My personal opinion is that a lot of the new capacity will be bought to replace old lines, so they will not require a great deal of additional wood resource." He also pointed out that there is a lot of poor quality particleboard from old lines in China and a need to raise the image of this product to gain acceptance. With only one million m3 being produced on modern continuous lines so far, this is a challenge - to raise the profitability. Mr Liu Shouhua, Dieffenbacher's chief representative in China, believes there is also a good future for cereal based boards. Didier Goesaert of Dieffenbacher subsidiary SPE was offering his latest drum dryer with redesigned internal structures to give better distribution of flakes or strands. German press maker Wemhöner is to open its brand new, purpose-built factory and showroom in Changzhou on June 8. It will have 3,000m2 of production space and 500m² of offices. "We will start with making standard-type membrane presses for sale worldwide and we expect to sell at least 50% outside China," said chief executive Heiner Wemhöner. "We will see what else we will manufacture there later. We will have German engineers at the new factory ensuring quality and service and we have also already trained Chinese staff in Germany. We will offer facilities for customers to bring their panels for test-lamination as well." The company also supplies short-cycle presses to China, but Mr Wemhöner admitted the competition there is very tough. Modul Systeme reported a lot of good contacts made at the show. The company has had some success in supplying secondhand refurbished green end machinery in particular, which has been used together with brand new continuous press lines to control the overall cost of the project. One such project recently involved transporting a range of machinery from the UK to China, for the green end and panel finishing. "I see a good future for this kind of project," said Eberhard Kühnlein of Modul. Apart from secondhand machinery, Modul also offers brand new glue preparation and dosing systems - everything from the dry silos to the forming line. Andritz of Austria, famous for its refiners and green end equipment, has had considerable success in China, supplying its refiners in particular, both to imported machinery lines and those where the main components are made by Chinese companies. Gernot Hartmann, sales manager, service, for the panel industry said his stand had been very busy every day and he was pleased to see visitors from India and Iran. Andritz has over 80 lines running in China and four starting up this year, so far. The company has a repair shop in Foshan, Guangzhou province, for repairs and spare parts - mainly for the wear parts in plug screw feeders, often worn heavily by the wood quality employed in China. Also from Austria, Berndorf Band, supplier of continuous stainless steel press belts, said it had supplied 38 wood based panel lines so far in China. It has a Beijing base for service and support and the full range of belt repair tools and services. Italy was represented by only two companies in the panel sector: Imeas and Cremona. Imeas was promoting its wide-belt sanders which have had some success in China, mainly on imported continuous press lines. Mr Lazzaro Cremona, chief executive of this supplier of veneer processing machinery, reported that business in China has improved over recent years and he is confident of the future for his company. "We are now supplying some press dryers to customers who want to upgrade their quality to European standards," he said. "I think slicing veneer is getting more and more interesting in China because they need thicker veneer for furniture that is to be exported to North America and Europe." From Finland, Raute was offering complete lines for plywood, LVL and parquet flooring manufacture, as well as its overlaying lines. It has recently set up a wholly-owned company in Shanghai to make some of the simpler components for its machines. Mr Hannu Lukkari, area sales manager, said that he sees a good future for LVL, particularly in non-structural applications at first, as it is ideally suited to China's plantation-grown wood. From the US came GTS Energy, which reported having six of its energy plants running in China and two under construction, at Dongdun, Hubei and Luyuan, Guangdong. It also has a letter of intent for three more lines, for Weihua, one of which includes a power plant. In 2005, WoodMac China in Shanghai went from being a biennial show, thus effectively alternating with the WM Fair in Beijing, to an annual show. The organisers have now apparently seen the light and realised there are too many shows chasing the available business and the exhibition is to go back to being biennial, with the next event being held in 2009.

As their counterparts in Brazil and Chile invest millions of dollars in ever bigger and more sophisticated panel lines to match soaring market demand, Mexico - population 108 million - is yet to install its first world-scale MDF line. The nation's fibreboard (MDF/HDF) consumption is rising at a rate of around 10% per year, with all but 5% of the 300,000m³/year it used in 2006 being fed by imports - mainly from the US and Chile. A similar trend is forecast for this and next year, according to data presented to Mexican panel makers by Bernard Fuller of consulting firm RISI last October. While the country's dwindling wood reserves are barely sufficient to support its particleboard producers, decades of deforestation, an ever drier climate and a lack of serious capital investment to regenerate the woodland stock have further restricted panel industry development. However, a glimmer of hope is emerging in Mexico's tropical south with the prospect of a new sustainable wood resource growing up, with the spread of fast-growing eucalypt and gmelina plantations. For decades, most of Mexico's forest land has been, and remains today, in the grip of the archaic and inflexible 'ejido' communal land tenure system. In spite of a change of government in 2000, after 71 years of one-party rule, there was little reform or change in regulations. The president of the Mexican wood panel manufacturers' association ANAFATA, Emilio Ayub Touché, continues to press the federal government for urgent action to aid fresh forest development. A new president, Felipe Calderon, from Fox's National Action Party, was elected for a six-year term last year. ANAFATA concedes that the government operates a tree planting incentive scheme, started in 1995. This offers forest plantation investors an annual sum of around US$400 per hectare for the first five years of growth, according to the organisation's director general Armando Santiago. "Forest plantation in Mexico is going to grow because these incentives are really very good," he told WBPI during a meeting at ANAFATA's Mexico City offices. In addition, Mr Santiago reported, the Mexican government has set aside a sum of six billion Mexican pesos (US$555,000) for a scheme intended to support reforesting by the 'ejido' forest owners. This will involve the planting of 250 million tree seedlings in the community-run forests during 2007. Even so, the panel makers are disappointed that the authorities have failed to get more involved in resolving what is a serious national problem. "The situation really has not changed [shortage of quality wood]. If anything, it has got worse in Mexico," admitted the ANAFATA president, who is also president of particleboard and softwood plywood manufacturer Duraplay de Parral SA de CV, located in the huge northern Mexican state of Chihuahua (see p30). The squeeze on the flow of wood supplies is tightening as government tree cutting permits granted to the community 'ejido' forest owners are being restricted a little further each year. "This has affected the numbers of logs going to sawmills or plywood mills, but not so much the particleboard operations. Distribution of the wood has changed - bigger diameter logs to smaller ones. "Most of what people tend to cut are big and more valuable trees. So you have a forest left with smaller ones which should go either to particleboard or pulping," explained Mr Ayub, adding that the smaller trees were often left unharvested. The panel industry in Mexico has shrunk in recent years as smaller players drop out, and consolidation has taken place among the bigger producers. Today the sector is dominated by one larger particleboard company, Mexico City-based Rexcel SA de CV, part of the quoted industrial conglomerate Desc SA de CV (see p33). Rexcel's managing director Carlos de la Hoz, whose company now has particleboard capacity of around 380,000m³/year at two plants in north and central Mexico, acknowledges the problems faced by his industry as a whole. "The current [fibre] supply for the Mexican particleboard industry is tight, but has not been a factor for the industry to shut down. It is difficult, and the cost has been high, but there has been a reasonable amount of wood - not always of the best quality - available," he admitted. Mr de la Hoz agreed that for the plywood industry it is "a different story" with a "much more difficult supply situation for them". The wood supply is inadequate now for the launch of even one world-scale MDF plant in the country, he confirmed. The executive admitted Rexcel would have launched a sizeable MDF project already if the raw material conditions were better. He suggested that the situation is similar with other panel producers in Mexico, pointing out that the region's top panel maker, Masisa SA of Chile, which runs a particleboard mill in Mexico, would probably have gone into MDF too if better quality fibre was available. The Rexcel boss admitted that at the root of the wood crisis is a strong environmental "protectionist" streak over Mexico's natural resources. With its wood products industry based originally on its natural forests, they are seen more to be preserved than as a resource for a "solid industry", unlike in South America. "We're trying to persuade the government to change the mentality of how best to handle the forests," he added. He acknowledged the other major issue concerns the 'ejido' ownership but he is not alone in treading carefully in this most delicate of constitutional matters in Mexico. Rexcel is among the leaders in moves to establish a fresh wood resource in the south eastern states of Mexico. A Rexcel subsidiary already has eucalypt trees of four and seven years growing on a 10,000ha plantation in the southern state of Tabasco. This species would normally be ready for harvesting for panels after seven years. Mr de la Hoz is quick to sing the praises of the south eastern plantations, although he stresses that there will be insufficient fibre supply to support major industry growth from there within the next 10 years. "[Plantation] has a lot of attributes. It has environmental protection, creates new industry, new businesses for the poor communities and creates new jobs. But, its a long-term project for the country and for the people of Mexico," he said. According to ANAFATA, a major feasibility study on the prospects of developing a new forest products centre in south east Mexico, based on 500,000ha of tree plantations, was completed by consulting group Jaakko Pöyry for four southern Mexican states: Veracruz, Oaxaca, Tabasco and Chiapas to attract new investment. It showed that the region could in the long-term sustain two plywood, one particleboard and one MDF plant and a pulp mill. Duraplay's Emilio Ayub acknowledges the obvious benefits to the sector of the plantations option and agreed tree growth rates for the southeast are impressive at around 40m3/year. Attempts to start plantations in the arid north have met with failure and few are willing to invest in the forest without the security of ownership. In the south, where a smaller growing area is needed for high yield, there are more opportunities for private investors to acquire deforested land for plantations. But the major drawback to the industry remains the fact that most panel mills are located in central and northern Mexico, closer to the giant US market, and over a thousand miles away from a future southern fibre source. No doubt the panel makers are facing a new dilemma but most agree there is but one way to turn. "There's huge potential for plantations in the south and that's where I think the wood basket will be in the long term," said Mr Ayub. If the plantations and government and industry projects are successful, Mr de la Hoz predicts Mexico could finally have two world-scale MDF plants of its own.

The Chilean Masisa group, already with board mills in five countries, aims to boost its current 300,000m³/year Brazilian capacity to feed the market's voracious appetite for MDF. Masisa plans a new 350,000m³/year mill in Brazil's southernmost state of Rio Grande do Sul (RS) state, with likely start-up late next year. This April, when WBPI visited Masisa do Brasil, the project was awaiting the all-important environment agency green light and the formal Masisa board go-ahead. A supplier order for the main line equipment was expected to be placed by June, according to Pablo Rossler, production director of group subsidiary Masisa do Brasil Ltda. Always the scrupulous planner, Masisa already has forest plantation land in the state, where last year it bought, and is planting, another 3,000ha to feed the proposed mill being sited in Montenegro. It has also secured long-term supply contracts with a number of third party wood providers. So far, RS has escaped the fierce battle for land raging further north, especially in Paraná and São Paulo states, between expanding wood pulp and panel producers, power generators, and land-hungry soya and sugar cane growers spurred on by the global 'clean fuel' revolution. But, as panel makers move south to vie with giant pulp companies like Aracruz to scoop up potential affordable forest land, a battle there too seems just a matter of time. Masisa do Brasil, based in Curitiba, Paraná state, operates its existing Valmet (Metso)/Küsters MDF line alongside Brazil's only OSB line in Ponta Grossa. The decision to look south, outside Paraná, for its next mill was prompted by the group's need for raw material, admits Mr Rossler, who will run the new mill too. Estimates put the likely consumption of wood by the new MDF line at around 600,000 tonnes/year so every effort is being made to boost the yield of local forest resources and to cut the costs of shipping wood to the mill. Some plantation is being switched to fast-maturing eucalypt, while the 76ha Montenegro site was chosen partly for its ease of communications, with road, rail and river access to wood sources. It is understood Masisa considered locating its second Brazilian panel plant in the deep south of RS near the port city of Rio Grande, closer to the Uruguayan border. This would have offered an abundant local wood resource, but panel freight costs would have been too high. Montenegro, near the state capital Porto Alegre, could ship logs by river from islands in the giant Lagoa dos Patos lagoon. The RS plant is expected to be virtually identical to Masisa's latest Chilean project, due to launch a 2.75m-wide Siempelkamp press-equipped MDF line with 350,000m³/year capacity by June. With MDF demand growing steadily in Brazil over the past two years, and with few capacity expansions planned, Masisa has been doing everything possible to raise the output of its Ponta Grossa line. It was kept running with barely a halt for holidays and maintenance, said Argentine Pablo Rossler. The line, which manufactures mostly 15-18mm thick standard MDF for Brazil's furniture industry, includes a 33m long, 2.75m wide Küsters continuous press. A number of upgrades and modifications since 2004 have increased line capacity from its original 240,000m³/year up to 300,000m³ this year. In mid-2005, Masisa installed a second Metso refiner, raising fibre throughput from 20-33 tonnes/hour. An investment of one million US dollars was also made to expand wood preparation by installing two new chip screens. Like other MDF manufacturers, Masisa aims to grow its margins through pushing its value added product sales: The company invested around four million US dollars to add a second Wemhöner melamine laminating line and today is surfacing more than two thirds of its board capacity. Even so, it still supplies a proportion of raw board to customers who paint it themselves. Two years ago, Masisa faced a problem when it was unable to obtain sufficient ready-impregnated overlay paper for laminating because of a rash of new laminating lines installed by other Brazilian producers. It has since invested in its own three million m²/month Vits impregnator, which is proving itself with an output of some two million m²/month. Some prepared papers were shipped to Chile to supplement Masisa's needs there. One major innovation was the company's new embossed-in-register finished board range, 'Masisa Nature', with laminate paper revealing the wood grain pattern. The two designs, offered in six colours and launched in January, already represent 15% of laminate production. Upgrading its customer service, the firm introduced a section applying a peel-off protective polythene film to the faces of dark coloured melamine board. This manual process, turning out around 2,000m³/month, was due to be automated, said Mr Rossler in April. Masisa is proud of the quality of its MDF panels, not least because it claims to have stolen a march on its regional competitors in manufacturing 100% E1 board. The Brazilian firm is also a regional leader in the manufacture of OSB with its big 350,000m³/year Dieffenbacher continuous press line in Ponta Grossa. Since its OSB launch, Masisa has created a new market, not only taking on plywood in some areas, but also through a range of innovative products using the board. To start with, Masisa relied heavily on sales to a booming North American construction market, with around 70% of its output exported there in 2004-5. At one point, output from a tongue-and-groove line at Ponta Grossa, supplying product for US flooring, was providing 80% of the US sales, recalled Mr Rossler. But Masisa, which initially set out to develop a Latin American OSB market, anticipated the slump in US housing starts and falling OSB prices with its growing range of local niche products. Furniture parts, heavy-duty packaging and pallets and construction products have all contributed to the alternative marketplace. In the case of furniture, Masisa created a successful niche supplying board for sofa frames and claims one sofa maker set up a plant reliant on its OSB. This May, it was due to launch a fresh product in Brazil - two-side high pressure laminated OSB for fitted kitchen and closet furniture, both water and termite resistant, according to commercial director Jorge Grandi. Other local products it has developed include the low priced 'tapume' panel for building site hoardings; the 22mm thick, 3-5m long OSB 'Eco-tabua' planks to replace solid wood used for table tops, construction walkways and concrete column form; and low-water-resistant UF resin panel for indoor furniture. These three represented 50% of OSB sales early this year. While Masisa's OSB is certainly making inroads in Brazil and its surrounding countries, last year showed exports beyond the region still represented 51% of total sales. Earlier this year, it was shipping around 10,000m³/month of board to China and Europe, including Latvia and Poland. "What we need now is to change the profile of our OSB sales. We are trying to increase sales of OSB 'Form' (a film-faced concrete moulding product) and come out of low margin products," said Mr Grandi. He played down the future for general OSB export sales to China and Europe and suggested Masisa is not confronting plywood head-on but following a new product route. In April, Masisa was running its Dieffenbacher line at around 80% of capacity and demand was set to push it up to full production during May. So, OSB seems gradually to be taking root in Brazil and it is clear Masisa has been studying the possibility of building a second line for the panel in the region. Meanwhile, the case for more MDF capacity is clearly made and the group will soon have its next Brazilian plant running.

Mexico City-based Rexcel, part of the Mexican chemicals-to-food and property conglomerate Desc SA de CV, came to dominate the Mexican particleboard sector as a result of its timely 2005 acquisition of the northern business of Paneles Ponderosa in Chihuahua. Today, Rexcel has set its sights on expanding its particleboard capacity still further and dreams of one day launching Mexico's first world-scale MDF plant, once the nation's severe wood fibre crisis is resolved. The acquisition was a good fit between Paneles, an established exporter of particleboard and low pressure laminate panels to the US, and Rexcel, a quality board maker with a strong position in decorative and high pressure laminates. Since 2005, Rexcel has been engrossed in completing its merger programme for the integration and improvement of the Paneles Ponderosa plant in Chihuahua city. Phase one of the extensive programme involved bringing together the differing business cultures, rationalising product lines and restructuring some of the merging companies' operations. It also included a major maintenance overhaul of the Paneles facility's Bison/Dieffenbacher continuous press line, aimed at getting the best out of its current capacity. The overhaul, involving work on areas such as electrical maintenance and the dryer, was completed in early April this year, according to Rexcel managing director Carlos de la Hoz Trigos. In a second phase, Rexcel is planning a series of investments to tackle bottlenecks in various parts of the Chihuahua line, currently producing 180,000m3/year, to bring the plant up to its full potential capacity of more than 300,000m³/year. This will see a thorough de-bottlenecking exercise upstream of the Dieffenbacher press, which was only installed in 2001 after fire destroyed Ponderosa's old eight-opening Siempelkamp press. Fibre preparation, the dryer and the glue kitchen and blending will be upgraded, Mr de la Hoz told WBPI in an interview at Rexcel's Mexico City headquarters at the end of March. Investment of between US$4-6 million has been earmarked for this project, but the company plans to delay its go-ahead by several months because of the current weak state of the US furniture market. "We put it on standby for maybe six months because the natural market, aside from Mexico, is the south, central south and south west US and the current activity of the US market is not very solid," said Mr de la Hoz. The work should be completed within the next year and a half. Rexcel runs a second, 35-year-old, panel plant hundreds of miles south at Zitácuaro in the rural state of Michoacan. There, an old Siempelkamp batch press with an original capacity of just 35m³/day was coaxed and upgraded over the years to offer a current output of 185,000m³/year. The company remains proud of this well-run facility, with its highly efficient wood processing section and panel finishing lines, serving primarily the Mexican market. The firm's third unit, in Lerma, west of Mexico City, is located alongside its formaldehyde and resins plant and acts as the company's laminating centre. While it does not produce any particleboard, it has given Rexcel its reputation for the production of high pressure laminates and a range of melamine and finish foil panels. Since the Rexcel takeover both units, in Lerma and Chihuahua, have seen job cutbacks and the new owners aim to improve the structural efficiency, particularly at the laminating centre. Rexcel wants to share Lerma's expertise in resin technology and formulations with its Chihuahua workforce. Each of the three plants has low-pressure laminating capacity and there are finish foil presses at Zitacuaro and Chihuahua. The southern mill has two Wemhöner melamine lines, a one million m²/year finish foil press and a Vits impregnation line. The former Ponderosa facility operates two Siempelkamp melamine lines and a new Wemhöner press is being installed to operate before the end of the year, said Mr de la Hoz. Veneered board is still an important market in Mexico and, as part of its restructuring, Rexcel switched a veneer press from its new northern plant to Lerma where it began delivering product in May. Lerma runs three high pressure laminate (HPL) lines. With an eye on freight costs, in its restructuring measures the company has looked over its enlarged capacity to ensure customers are served by the correct plant. On the product front, Rexcel found that some HPL customers also wanted melamine laminates. With the two lines it was able, unusually, to offer the same design for both HPL and low-pressure board. The firm was also able to rationalise Ponderosa's range of melamine panel designs, keeping several with the highest volume and dropping the rest, explained Mr de la Hoz. It is that clear Rexcel, backed by the muscle of its quoted parent group, is keen to invest and expand in the panels sector. But its executives are only too well aware of the challenges facing their industry. Today, there is great uncertainty over how best to resolve the serious issues surrounding the management of Mexico's forest land and the acute shortage of good quality raw material for its forest products industry (see p28). "We would love to have an MDF plant, but first we need to have the wood supply [in Mexico]," admitted Mr de la Hoz. Rexcel is already studying how best to proceed with this but the work is still at a "very preliminary" stage, he stressed. Pressed on the likely timing for such a project, the chief executive believed it could come to fruition in less than 10 years. "We are still working on that...if there were enough wood supply now we would already have a project for MDF," he confided. So, what is Mexico's biggest panel maker doing to try to shift the barrier across its road to progress? Apart from adding its voice to those of fellow producers calling for fundamental change in government policy covering the forests, it is involved in direct action to improve the situation. With hope turning increasingly to a possible solution through fresh plantation development in Mexico's south east region, a Rexcel subsidiary planted 10,000ha of eucalyptus in Tabasco state. The fast-growing trees are already beginning to reach maturity, today ranging from four to seven years old. But part of the long-term solution to the industry's supply problem is more fundamental. It requires a change in the mentality of a big section of the Mexican population towards sustainable exploitation of the nation's forest resources, believes Mr de la Hoz. In just one move to educate the population and stimulate reforestation, his company runs tree nurseries at its sites, which offer seedlings and technical help to local people wanting to plant them. Members of the community, Rexcel employees and their families and authority representatives are invited to take plants on the 'Dia del Arbol', or Tree Day, each year. The Zitacuaro site nursery, launched back in 1992, produces one million pine and cedar seedlings per year and has helped reforest 7,000ha locally since it started. Rexcel has already been supplied with new wood as a result, according to the chief executive. His company is developing a similar nursery in the more arid conditions at the Chihuahua plant, where it aims to grow pine seedlings for distribution, he told WBPI. There is one potential drawback to developing fresh wood resources in Mexico's more fertile south eastern states: panel producers, whose operations are concentrated in central and northern Mexico, face the added cost of hauling their raw material more than 1,000 miles from new plantations there. The Rexcel boss believes the sector should focus in the short term on growing more wood and accepts that it could take more than a decade for producers to relocate closer to any distant new fibre source.

With its four-year-old, 180,000m³/year, Siempelkamp ContiRoll line earlier uprated to achieve regular output of 800m³/day, Fibraplac Chapas de MDF Ltda launched an identical Siempelkamp line in December 2006. By this April, it reached 75% of its initial capacity and was due to run full out by June. Fibraplac, based in Porto Alegre, the capital of Brazil's southernmost state of Rio Grande do Sul, has already established the makings of a major wood products complex in Glorinha. The site, 50km from Porto Alegre, includes a sawmill, a building earmarked for plywood production and space for a third panel line. The firm, which has twice discarded plans to manufacture particleboard, now remains steadfast in its belief that MDF is a product of the future. It is committed to making standard thickness board aimed at Brazil's booming furniture sector. Faced, like its Brazilian MDF competitors, with raging local board demand, Fibraplac is now preparing to tackle a major bottleneck in panel finishing. Since its board making debut in 2003, the firm has depended on a single Siempelkamp-supplied low pressure laminating line. Much of its MDF production is sold as raw board to large customers who paint it themselves, but Fibraplac aims ultimately to double the proportion it laminates. To this end, the company is investing six million US dollars in two more Siempelkamp short-cycle lines, set to operate by the end of this year. "Our goal is to have 50% of our board production as melamine laminated panels. When we began laminating, we produced only 15% covered board," said Fibraplac projects manager and group adviser Umberto Pergher, when WBPI visited the firm in April. This could be achieved within three to four years, he said. Fibraplac has come a long way in a short time. Created in 2000 by the family-run Isdra Group to spearhead its entry into the panel sector, it has nimbly scaled a steep learning curve to become a respected member of Brazil's expanding MDF 'club'. It was Fibraplac that launched Brazil's current round of MDF capacity expansion projects back in 2005 with plans for its second line. It has timed its expansion well, taking advantage of sustained annual MDF market growth at home of some 15%, rising prices and board supply virtually dried up. Adding value to its panels has been a priority for Fibraplac since it started up. It invested in a US$3m Homag 1.5 million m²/year laminate flooring production line, along with its original melamine line. Early on, the Glorinha mill ran the Homag line for "a month or two", selling the resulting flooring into what is still a sluggish market. Then, with the furniture market sucking up every MDF panel the line could turn out, Fibraplac halted flooring production altogether. The firm now admits that its fears that the domestic market would not absorb all the 'MDF I' capacity were misplaced. It is restudying flooring and is hopeful it can re-launch the Homag line when the new laminating lines are running early next year, according to Mr Pergher. Flooring output will depend on the state of the Brazilian market at the time, but the executive forecast that production, once restarted, should be continuous. Estimates put Brazilian flooring growth at around 5% per year although Mr Pergher reported new homes in the country's developed southern states are increasingly fitting laminate floors. A limited volume of 7mm panels will be produced on Glorinha's 'MDF I' line with the rest of Fibraplac's expanded capacity concentrating on standard 12mm and 15mm board for furniture. The site was originally established with wood yard and fibre preparation to serve three panel lines. Elsewhere, new equipment installed as part of the 'MDF II' expansion project includes another Büttner dryer, an Imal glue kitchen and a new biomass-fuelled 50MW Vyncke energy unit. Siempelkamp's first Fibraplac line included a revolutionary one-head forming line producing greater mat uniformity and a more even fibre distribution and density. The new continuous press is 27m long and 2.75m wide. An automated intermediate storage system was provided by Siempelkamp subsidiary SHS, while a new Steinemann six-head sanding line and Siempelkamp saw complete the panel line. Although notorious for keeping its competitors, and the world, guessing about its next move, Fibraplac appears to be setting its sights on a third MDF line. The firm only occupies 20ha of the 100ha Glorinha site where it still has long-term plans to gather around it a downstream cluster of furniture plants and producers of such components as MDF mouldings. One other potential project has shown signs of progress. In 2005, Fibraplac floated the idea of entering the pine plywood business with a tentative scheme to establish a 140,000m³/year plant on the Glorinha site. The aim was to capitalise on a healthy US market for softwood plywood panels. Even though the current strength of the Brazilian currency, the Real, against a weak US dollar makes exporting an unlikely option, Fibraplac seems to be looking longer term. Last year, it completed the construction of a building for plywood beside the sawmill, although it has not yet been equipped. "We still think [softwood] plywood is a good project that Fibraplac should eventually be involved in…..we want to make best use of our pine wood. But this project is waiting for the right moment," said Mr Pergher. Anyway, the company still has a great deal on its plate with other expansion before starting on plywood, he added. After production chief Mariano Dantur do Canto left to join rival panel maker Satipel Industrial Ltda, the role of launching MDF II and future schemes has fallen to young production director Alexandre Araujo. Where Fibraplac goes from here depends crucially on the cost and future supply of its chief raw material. Competition for wood and forest plantation land in much of southern Brazil has rarely been fiercer as expanding panel and pulp producers battle sugar cane and soya crop farmers for valuable growing areas. While much of the pressure is concentrated in the states of Paraná and São Paulo, new industrial forest products schemes further south mean Rio Grande do Sul state will be the next raw material battleground. Competition for wood already comes in the form of two big pulp mills, one operated by Brazilian giant group Aracruz, as well as Satipel's Taquari particleboard mill. Meanwhile, Masisa do Brasil Ltda plans to site its second world-scale MDF plant at Montenegro, close to Porto Alegre. Since it got going, Fibraplac has doubled its own forest plantations to 30,000ha and has been planting both 'elliotti' pine and, increasingly, eucalypt at a rate of 2,000ha per year. Even so, pine still represents 90% of its forest cover. With two panel lines consuming around 100,000m³ of wood per month, the firm still relies on the state's scattered independent tree farmers for most of its supply, said Mr Pergher. Fibraplac continues to add more land to its overall 40,000ha holding, despite rising prices, with the ultimate aim of gathering a 100,000ha base, the manager said. It is already forced to truck logs up to 200km from the southernmost region of Brazil's most southerly state to satisfy the voracious demands of its industrial plant. Fibraplac remains preoccupied with developing its Glorinha complex, where a third panel line, probably MDF, is clearly on the cards soon but the firm has not ruled out locating future capacity further north in other Brazilian states, where it has other product factories. Today, the company is convinced particleboard, even with its locally conceived fresh image as 'medium density particleboard (MDP)' is "not a good business" to be in. Although still the furniture sector's major panel material, it is a mature product, without MDF's dynamic growth prospects, the manager insisted. Even so, in the ever-changing world of panels, Fibraplac seems likely to hedge its bets and keep its 1,500m³/day particleboard line project on ice. Amidst all the mystery surrounding group president Alberto Isdra's panel sector plans, what is clear is that Fibraplac, now a member of Brazil's board industry association ABIPA, is already a fully-fledged player on the panel scene.

Located in the dusty silver mining town of Hidalgo del Parral, deep in the heart of Mexico's big northern state of Chihuahua, Duraplay de Parral SA de CV, the 50-year-old former lumber company, has enjoyed strong particleboard sales across the US border in the past couple of years. It benefited from the booming US housing market and falling panel supply in the US and Canada, but, like other Mexican exporters, Duraplay has seen a slowdown this year due to the US market slump. As a medium-sized producer in a panel sector dominated by one big player, Mexico City-based Rexcel SA de CV with over half the production, Duraplay is focusing on particleboard and growing its value-added product range. This means selling more panels with melamine, finish foil and veneered finishes to niche markets in Mexico and the US. There is little doubt the US downturn means Duraplay will now feel growing competitive pressure from both local and North American board producers. Nevertheless, the Mexican producer is sure it can pick up increasing business from the country's powerful 'maquiladora' chain of assembly plants along the US frontier. "Traditionally, they [maquiladoras] bought board from the US mills. Now, they are buying from Mexican producers. That will be a growth market for us," said a confident Emilio Ayub Touché, president of Duraplay. The US furniture industry is certainly expected to continue feeling the heat of Asian competition. But the Asian cloud has something of a silver lining for the Parral company, according to Mr Ayub. "With all the changes in the structure of the furniture industry in the US, which was hit hard by imports from China, some [furniture] players are beginning to look to Mexico, located close by, for competitive costs," he told WBPI during an April visit. Duraplay is "betting on that", not least because two years ago the group went downstream itself, launching its own ready-to-assemble (RTA) flat-pack furniture operation on the US border in Ciudad Juárez. "It's the continuation of our strategy to roll into value-added business. We wanted to go downstream, adding to the chain of value," explained Mr Ayub. He admits that moving into a totally different market is a "challenging experience". Now, with the RTA sales growing slowly, the family-owned group is seeking an alliance to allow it to work with "an established company" in the business and get into the bigger market, he said. Duraplay, with a total particleboard capacity of 140,000m³/year, runs two lines at its Parral plant: one a 108,000m³/year Bison unit with a Dieffenbacher single-opening press producing 8x48ft standard thickness panels; and the other a smaller Mende line producing thin board. Located in the heart of Chihuahua, the producer draws its supplies of ponderosa pine from the mountain forests to the south and west of the state, which are still controlled by Mexico's traditional community-based 'ejido' system. Wood, mainly for the particleboard line, is trucked up to 250km from southern Chihuahua and part of neighbouring Durango state. Larger logs, used for plywood, are hauled up to twice that distance from Duraplay's log yards in the mountains of western Chihuahua. Only 15% of its particleboard output is sold as raw board as most goes through to the finishing process. Duraplay operates two Wemhöner melamine laminating lines, a Bürkle finish foil line, soon to be upgraded, and an Anthon cut-to-size system installed in September 2006. Value-adding includes cut-to-size and 30% of all its finished panels are melamine faced, according to operations development manager Ramón Castro. One product where Duraplay has enjoyed a healthy export market for its particleboard is 'bullnose' shelving for the US, which accounts for around 12% of total output. This market too has weakened with the construction downturn and the product is particularly price-sensitive, said Mr Castro. Although his company is not an MDF producer, it buys in the panel from Flakeboard in the US and laminates it for resale in its bid to add value to its business. In support of the group's RTA offshoot, and to bolster its laminating capacity, a second Wemhöner melamine line was installed in October last year. Another project will see finish foil production upgraded with the arrival of a new Harland foil laminator to replace the Bürkle equipment. Other planned investment includes upgrading the Bison board line's glue kitchen and blending section with Imal equipment by August this year. This is required because Duraplay, which supplies its own resin, cut resin emissions to meet market demand, explained Duraplay's technical adviser, Austrian Ewald Zucker. The panel maker is also a manufacturer of softwood plywood, directed at 'face grade' products as well as construction applications. Business is "tough and competitive" at present and Mexican producers are under great pressure from imports to find new ways to market the traditionally well-received ponderosa pine plywood. Little goes to waste at Duraplay where a trimming and squaring machine converts peeler cores to fence posts, for example. The Parral company, originally founded by a family 50 years ago, ran into financial difficulties in the 1990s and was rescued by Mr Ayub's family. The original family owners still has a stake in the business. Today, Duraplay compares itself with a newer particleboard player on the Mexican scene, Masisa Mexico SA de CV, subsidiary of the Chilean group Masisa SA. Masisa runs a 149,000m³/year particleboard plant to the south, in Durango state, and the two firms rank as medium-sized producers. As president of the Mexican panel makers' association ANAFATA, Mr Ayub is only too aware of the major challenges - not least the ever more serious national lack of quality wood - facing producers. Mexico's failure to protect and expand its forest resource over decades, and the lack of long-term security for tree plantation investors, have inhibited industry growth. One example of how sector development is being stifled is its inability to sustain a single world-scale MDF plant in a country where MDF/HDF consumption was above 300,000m³ last year. "The [fibre shortage] situation has not changed in the last few years. If anything, it has got worse," admitted the ANAFATA president. Looking longer-term, Duraplay itself is keen to expand its particleboard production and capacity and is not ruling out going into the MDF business when conditions are right, Mr Ayub told WBPI. For the time being though, any radical new plans for expansion by Duraplay seem set to remain on hold in today's climate of deep uncertainty about the future direction of Mexico's wood panel industry. Although there is a glimmer of hope for a potential breakthrough, with new plantation projects beginning to take shape in several states, even the most promising ones in the south will take some years to mature. Consolidation in the sector seems set to continue and Duraplay is content to pursue its current policy for now. "For the time being, I think our strategy should continue with adding as much value as possible and having very tightly targeted market segments," said the Duraplay president.

The city of Shouguang, in Shandong province, was the location chosen for Chenming's first paper mill, which went into production in 1958. Not much happened in the company until 1987, when the appointment of a new director led to the establishment of the Shouguang mill as the leading player in Shandong's paper industry. Expansion of the company proceeded in the ensuing years until the Chenming Group (which was established under this name in 1993 and launched on the stock exchange) became the largest paper producer in China, with 10 subsidiaries nationwide. The company has seven international first-class, and 15 national first-class, paper making production lines, producing many different kinds of paper. Total annual production is four million tons. In addition, Chenming has a paper making machinery manufacturing arm, while it has also diversified into bricks, cement, energy generation and, of course, wood based panels. Today it is one of the top 500 enterprises in China, one of the top 50 paper makers worldwide, and the first company in the Chinese paper industry to list both A & B shares for public purchase. To some extent it is a natural step from paper production to MDF manufacture and Chenming took that step in 2000, creating Chenming Panels and placing an order with Siempelkamp of Germany for its first MDF line. Construction work commenced on a large site adjacent to its Shouguang paper mill that same year. However, it was an unusual first step in that Chenming Group opted for a continuous line from day one, whereas most Chinese panel makers begin their career in panels with Chinese-made multi- or single-opening presses. Chenming did the reverse. Siempelkamp delivered its ContiRoll continuous press, the drying and sifting system, glue preparation and dosing, forming, trimming, cooling and part of the stacking line during 2002. The refiner was supplied by Andritz of Austria. The first board was produced in December of that year. That ContiRoll is 2.7m wide and 13.8m long with a design capacity of 250m³/day (8mm basis). Design speed of the press was 650mm/second. This gave a theoretical output of around 50-75,000m3/year but Chenming is actually producing 105,000m³, or 8,800m³/month. This it puts down to careful management and optimisation of the line. The company has no problem with wood supply, according to vice general manager Mr Dong Yanbin, utilising plantation-grown wood, which is mainly poplar with some mixed woods. "The company has a plantation area of approximately three million mu (200,000ha) in Guangdong province and has invested more than nine billion yuan in planting trees and in pulp production," he said. Chenming's investment in panel production didn't stop with that first continuous line either. In October 2004, it built two HDF/MDF lines in Heze, Shandong where there is said to be an abundant wood supply. That mill is equipped with one refiner, from Andritz, feeding two multi-opening press lines from a domestic supplier. Annual capacity is around 200,000m³, making it the largest-capacity line in the locality. In March 2005, Qihe Chenming Panels in Shandong went into production with another Andritz refiner and Chinese-made press line for HDF/MDF. Capacity is again around 200,000m³. This gives a total MDF/HDF annual capacity for the Chenming Panels companies of 500,000m³. Juanchen Chenming Panels Co, again located in Heze City, produces not fibreboard but particleboard, employing an 8x48ft single-opening press line supplied by Schenck of Germany (now part of the Dieffenbacher group). Capacity here is 60,000m³/year. This company also offers melamine faced particleboard panels. Seeing an opportunity to add value to its fibreboard production, Chenming Group established a subsidiary company at the Shouguang factory to produce laminate flooring. Shouguang Chenming Flooring Co Ltd went into production in April 2004, using equipment imported from Europe. The line employs a Wemhöner short-cycle press, Paul multi-rip saw and Torwegge Hüllhorst tongue-and-groove line, with a Kallfass packaging line for plastic wrapping. The capacity for laminate flooring is five million m²/year, using decor paper from Chinese and overseas suppliers. Impregnation of the paper is also carried out on site. Thicknesses of laminate flooring produced are 8.2mm and, more unusually, 12.3mm. Chenming Flooring is able to offer surface structures of various kinds and also offers in-register embossing. Of course it is also possible to 'add value' to raw board in terms of producing a niche product and this is something that Chenming has achieved. The company is very quality- and environmentally-conscious and saw a market for E zero board, particularly for its laminate flooring. "We were the first company in China to use MDI resin in our boards," said Mr Dong proudly. "We started production in January this year, just in HDF boards for the laminate flooring. This is where we see the main market for E zero board at the moment, but maybe there will be other markets later. We are the first to produce E zero laminate flooring in China." The MDI (methyl diphenyl diisocyanate) is supplied by Huntsman Polyurethanes, which has a production plant in Shanghai. A tour of the Chenming Shouguang factory reveals a spotlessly clean and efficient production environment and the company is proud of its ISO9001 quality certification and its ISO14001 and China Green symbol environmental management status, feeling this attention to detail and quality sets it apart from many of its Chinese competitors. The chipping line was of local supply, as was the energy plant from Jilin province, whilst all the other main components of the line were imported from Europe. The logs are not debarked but the chips are washed. Sander dust and rejects from the sifters fuel the energy plant. The Andritz of Austria refiner is a 44in diameter unit and the drying system is by Büttner of Germany. There is a hood over the line before the press entry to maintain the mat temperature. The entire production process is monitored and controlled from the ground level control room alongside the press, which is equipped with real time graphics screens. After the press there is a GreCon combined thickness/blow detector and this is the extent of the quality control equipment located on the line; the rest of the testing is carried out in the laboratory, including careful monitoring of the formaldehyde content of the boards. Chenming only produces to E1 specification (or E0 where MDI is employed); there is no production of E2 grade panels. Master panels are cut to 2440x1220mm or 2460x1250mm, the latter being a standard size for flooring production. There is a Steinemann six-head sander at the end of the line. A separate building houses the two Chinese-made paper impregnation lines while another is occupied by the laminate flooring production line. "Although 2005 was quiet for new production lines, capacity is now increasing again," said Mr Dong. "Market demand is still increasing but there is fierce competition. "We have to focus on quality, our brand name of 'Chenming', and on service. However, there is big demand for our laminate flooring on both the domestic and export markets. We export to the US, Canada, South Korea, Australia and the Middle East. "We are a diligent and hard-working company and we are known for that."