In the second half of last year, producers reported their plants were fully sold as MDF panels led the charge with annual growth of some 28%.

One small newcomer to the Brazilian fibreboard market is already achieving remarkable success in the country’s northeast region, barely a year after pressing its first MDF panel.

Key to the success of this Chilean group’s strategic plan is how it develops its existing operations to serve the region’s huge and still-growing board market in Brazil.

Emboldened by Brazil’s seemingly insatiable love affair with MDF, the southern hemisphere’s biggest producer is investing over US$766m to add over 1.2 million m3/year more to its already sizeable board capacity.

The country’s latest Siempelkamp ContiRoll line, starting up this October, represents the first phase of what is a major integrated wood products complex. Apart from MDF, it will later include a 700,000m3/yr MDP (medium density particleboard) line, two low pressure melamine finishing units and a paper impregnation line, as well as a 310,000m3/year lumber saw mill.

With two new fibreboard plants – a 350,000m3/year thin MDF/HDF line and a 120,000m3/year standard MDF line – being brought on stream respectively by Eucatex and the newest plywood convert to fibreboard, Floraplac, by this year’s end, annual overall panel capacity in Brazil has swollen to almost 10 million m3.

The furniture sector has benefited greatly from a much needed boost this year after the Brazilian government cut the country’s IPI industrial products tax by 5%. Panel producers, too won some relief from a temporary relaxation of the tax.
That stimulus will have come as welcome news to another related, and increasingly important, sector – the wood components industry. This relatively new supply business, providing a wide range of panel based parts and mouldings, has grown up in Brazil within the past five years in response to changes in furniture manufacturing.
One wood components company which is expecting to expand its sales to the furniture business and to some other sectors in 2010 is São Paulo state-based Compomade Componentes de Madeira of Agudos.

Specifically targeting powerful demand for thin board in the domestic market, the new 350,000m3/year Dieffenbacher HDF/MDF line, erected at Eucatex’s Salto site, could operate at full capacity as soon as March 2011. While Brazil has plenty of MDF manufacturers turning out board 10mm and thicker, Eucatex is confident its line is the country’s first to be installed specifically for thin fibreboard.
“You do have other lines that make thin board, but not with the same efficiency that our line will have,” declared Eucatex’s ebullient executive vice president Flavio Maluf earlier this year.
In July he told WBPI his thin HDF product would be particularly good quality and high density and that its surface would be substantially better than that of thin MDF board.
“We are very happy, because the Brazilian economy is recovering very sharply this year,” said Mr Maluf.

The ongoing integration process to form the new group, named Duratex SA, had already ‘captured’ synergies valued at more than US$18.4m by early July 2010. The group says it is targeting eventual savings of some US$54.4m by the year 2016.

Arauco do Brasil SA, an MDF and MDP (medium density particleboard) manufacturer with nearly 87,000ha of its own planted forest land and seven wood panel lines at three plants in the country, is optimising its national output and preparing to grow still bigger in Brazil.

Despite the global economic crisis, the US giant, which launched the region’s first OSB mill in Chile five years ago, expects the panel will be in common structural use in Brazil in a little over three years’ time.
Only last year, LP South America established a powerful bridgehead in the region’s biggest country when it negotiated a complex deal to acquire Masisa SA’s 350,000m3/year continuous Dieffenbacher OSB line at Ponta Grossa.
In the longer term, LP aims to repeat in Brazil the OSB development process it employed in Chile with such success. That has seen two separate Chilean plants established – with one handling speciality OSB construction products – and rapid growth in the local market.
Today, LP Brazil is still focused on establishing the concept of wood frame housing in Brazil using OSB panels and on switching existing output at Ponta Grossa to structural products.
Strangely, economic pressures locally have helped the LP cause as house builders and the Brazilian authorities seek new technology to lower construction costs, says LP South America’s general manager Frederick Price, a pioneer of OSB development in the region.
“We are working to increment the demand for housing applications in Brazil... It’s going at a speed that’s good for us ...We are seen as a cheaper option. The [global] crisis is very bad, but it can still have a good side,” he told WBPI in a recent interview in Brazil.
If the market grows in the long term, as LP hopes, the company aims to take advantage of its ‘new’ continuous line to concentrate volume OSB panel output at Ponta Grossa. Then it plans to launch a separate batch-press line, primarily to make siding and other  speciality OSB products, elsewhere in Brazil, confirmed Mr Price.
The Anglo-Chilean executive is confident he will be able to sell around 70% of LP Brazil’s production in the huge Brazilian market after three years.
In July 2009, however, when WBPI visited LP in Ponta Grossa, the firm said the Dieffenbacher line was producing less than 40% of its total capacity in the face of the recession.
LP recognises that, while Masisa adopted a different approach to OSB production based on its furniture sector background, it did build up valuable local experience and created some promising OSB niche products.
But the US group only expects to continue producing around half the products that make up Masisa’s 10,000m3/month output. The company prefers to mainstream with the more familiar construction business.
“Some part of the Masisa legacy will remain with us in the future. We will continue about half the volume it was doing. The rest, we feel, doesn’t have a life,” said Mr Price.
His company aims to keep, for example, Masisa’s low-priced ‘Tapume’ board, used for building site hoardings; some of the heavy duty packaging products; and a new, stronger, version of the 22mm-thick ‘Ecotabua’OSB plank product used for construction walkways or table tops.
However, it is the construction potential for OSB that has attracted LP to move on to Brazil. With the national population due to soar by 41 million over the next 20 years
– and Brazil’s current housing deficit of an estimated 8 million homes – OSB seems to have a bright future there.
The decision to jump into the region’s biggest marketplace is a signal to South
America and beyond that the US forest products giant is committed to the region, stressed Mr Price.
The Brazilian plan is based on LP’s Chilean blueprint. The group came to Chile with OSB technology and set about ‘converting’ the construction industry to the new wood frame system creed.
It was not just a matter of selling to a new market, but “an educational thing”. Offering a mix of the right products, a competitive price, training and the right marketing, LP won over a receptive Chilean building sector. To date, the firm has trained around 7,000 carpenters overall to use OSB, explained the general manager.
The revolution in Chile, where 30% of new homes now use the wood frame construction system, was the result of a team effort between the OSB supplier, roofing providers and suppliers of metal structures, engineers and construction firms. In the space of a year, recalled Mr Price, the whole building system changed in Chile.
Today, around 90% of all social housing projects across Chile make use of OSB in construction, whereas four years back, usage was virtually zero, remembered another veteran of the campaign, LP South America’s operations manager Victor Flores.
He and Frederick Price were pioneers of OSB in Latin America when both were at the LP Chile predecessor Bomasil. It produced first panel at what is now LP’s Panguipulli mill in the Valdivia region in June 2001, recalled Mr Flores.
In early 2008, with OSB demand growing rapidly in Chile, group offshoot LP Chile brought on-stream its second national plant, 80 miles north of Panguipulli at Lautaro.
The ramp-up was rapid for the new 150,000m3/year batch-press line, which includes a modified secondhand press, formerly at LP’s US site in Montrose, Colorado.
But as the world crisis deepened, the market finally collapsed in November 2008 and the Lautaro mill, which had reached a capacity of 105,000m3/year, was closed in December pending an economic recovery.
In September 2009, LP was preparing to take a decision on where the South American operations should go next. Depending on market development it would either boost Brazilian production or restart the Lautaro mill.
Since then, the economic picture has brightened somewhat and the group hoped to relaunch the Chilean mill in January this year. Timing of a restart is important as mills must buy the necessary wood supply through the summer months – that is from November to March – to allow operation during that year.
The Lautaro start-up will rely on wood already acquired by LP in 2008 – and any it could buy in November and December 2009 – and production may be intermittent, with possible closure again from May to September 2010 and another re-start later, Mr Price warned when he updated WBPI in December 2009.
Once the Lautaro mill is fully operating again, the ultimate aim is for it to export around 50% of its overall output. While LP Chile sells some products to Brazil, other OSB is exported to countries including Argentina and Peru, the latter buying roofing and packaging products as well as shortterm housing components used to provide shelter for the mining sector.
Back in Brazil, LP plant managers and office staff have been settling in to their newly completed office block, located on the Ponta Grossa site that LP’s OSB plant still shares with Masisa’s MDF panel making operation.
The unique US$230,000 office building, designed by LP Brazil’s export manager, also a qualified architect, is constructed using a range of LP products and doubles as a showroom for LP clients.
What is extraordinary about the Ponta Grossa site today is that a ‘frontier’ has been established, passing right through the heart of the original Masisa operation. On one side are silos and machinery halls in the green livery of Masisa, while across the line stand buildings in the orange and blue style of LP South America.
On the split site, LP manages most of the ‘vital fluids’ of the two mills, including the thermal oil facility, the railhead which delivers wood to both lines and the woodyard. Executives at other Brazilian panel companies are still puzzled that teams from separate businesses can survive so close together.
But, after eight months of cooperation, it seems managers and workers from each plant have established a smooth relationship and avoided treading on each others’ toes.
While LP South America has not escaped the ill effects of the global crisis, it is clear that the company, along with Masisa, has played a big part in creating an OSB market in the region.
Certainly the original pioneers, like Frederick Price, are justly proud of their role in transforming the housing technology in large parts of the subcontinent.
Despite the global economic crisis, the US giant, which launched the region’s first OSB mill in Chile five years ago, expects the panel will be in common structural use in Brazil in a little over three years’ time.
Only last year, LP South America established a powerful bridgehead in the region’s biggest country when it negotiated a complex deal to acquire Masisa SA’s 350,000m3/year continuous Dieffenbacher OSB line at Ponta Grossa.
In the longer term, LP aims to repeat in Brazil the OSB development process it employed in Chile with such success. That has seen two separate Chilean plants established – with one handling speciality OSB construction products – and rapid growth in the local market.
Today, LP Brazil is still focused on establishing the concept of wood frame housing in Brazil using OSB panels and on switching existing output at Ponta Grossa to structural products.
Strangely, economic pressures locally have helped the LP cause as house builders and the Brazilian authorities seek new technology to lower construction costs, says LP South America’s general manager Frederick Price, a pioneer of OSB development in the region.
“We are working to increment the demand for housing applications in Brazil... It’s going at a speed that’s good for us ...We are seen as a cheaper option. The [global] crisis is very bad, but it can still have a good side,” he told WBPI in a recent interview in Brazil.
If the market grows in the long term, as LP hopes, the company aims to take advantage of its ‘new’ continuous line to concentrate volume OSB panel output at Ponta Grossa. Then it plans to launch a separate batch-press line, primarily to make siding and other  speciality OSB products, elsewhere in Brazil, confirmed Mr Price.
The Anglo-Chilean executive is confident he will be able to sell around 70% of LP Brazil’s production in the huge Brazilian market after three years.
In July 2009, however, when WBPI visited LP in Ponta Grossa, the firm said the Dieffenbacher line was producing less than 40% of its total capacity in the face of the recession.
LP recognises that, while Masisa adopted a different approach to OSB production based on its furniture sector background, it did build up valuable local experience and created some promising OSB niche products.
But the US group only expects to continue producing around half the products that make up Masisa’s 10,000m3/month output. The company prefers to mainstream with the more familiar construction business.
“Some part of the Masisa legacy will remain with us in the future. We will continue about half the volume it was doing. The rest, we feel, doesn’t have a life,” said Mr Price.
His company aims to keep, for example, Masisa’s low-priced ‘Tapume’ board, used for building site hoardings; some of the heavy duty packaging products; and a new, stronger, version of the 22mm-thick ‘Ecotabua’OSB plank product used for construction walkways or table tops.
However, it is the construction potential for OSB that has attracted LP to move on to Brazil. With the national population due to soar by 41 million over the next 20 years
– and Brazil’s current housing deficit of an estimated 8 million homes – OSB seems to have a bright future there.
The decision to jump into the region’s biggest marketplace is a signal to South
America and beyond that the US forest products giant is committed to the region, stressed Mr Price.
The Brazilian plan is based on LP’s Chilean blueprint. The group came to Chile with OSB technology and set about ‘converting’ the construction industry to the new wood frame system creed.
It was not just a matter of selling to a new market, but “an educational thing”. Offering a mix of the right products, a competitive price, training and the right marketing, LP won over a receptive Chilean building sector. To date, the firm has trained around 7,000 carpenters overall to use OSB, explained the general manager.
The revolution in Chile, where 30% of new homes now use the wood frame construction system, was the result of a team effort between the OSB supplier, roofing providers and suppliers of metal structures, engineers and construction firms. In the space of a year, recalled Mr Price, the whole building system changed in Chile.
Today, around 90% of all social housing projects across Chile make use of OSB in construction, whereas four years back, usage was virtually zero, remembered another veteran of the campaign, LP South America’s operations manager Victor Flores.
He and Frederick Price were pioneers of OSB in Latin America when both were at the LP Chile predecessor Bomasil. It produced first panel at what is now LP’s Panguipulli mill in the Valdivia region in June 2001, recalled Mr Flores.
In early 2008, with OSB demand growing rapidly in Chile, group offshoot LP Chile brought on-stream its second national plant, 80 miles north of Panguipulli at Lautaro.
The ramp-up was rapid for the new 150,000m3/year batch-press line, which includes a modified secondhand press, formerly at LP’s US site in Montrose, Colorado.
But as the world crisis deepened, the market finally collapsed in November 2008 and the Lautaro mill, which had reached a capacity of 105,000m3/year, was closed in December pending an economic recovery.
In September 2009, LP was preparing to take a decision on where the South American operations should go next. Depending on market development it would either boost Brazilian production or restart the Lautaro mill.
Since then, the economic picture has brightened somewhat and the group hoped to relaunch the Chilean mill in January this year. Timing of a restart is important as mills must buy the necessary wood supply through the summer months – that is from November to March – to allow operation during that year.
The Lautaro start-up will rely on wood already acquired by LP in 2008 – and any it could buy in November and December 2009 – and production may be intermittent, with possible closure again from May to September 2010 and another re-start later, Mr Price warned when he updated WBPI in December 2009.
Once the Lautaro mill is fully operating again, the ultimate aim is for it to export around 50% of its overall output. While LP Chile sells some products to Brazil, other OSB is exported to countries including Argentina and Peru, the latter buying roofing and packaging products as well as shortterm housing components used to provide shelter for the mining sector.
Back in Brazil, LP plant managers and office staff have been settling in to their newly completed office block, located on the Ponta Grossa site that LP’s OSB plant still shares with Masisa’s MDF panel making operation.
The unique US$230,000 office building, designed by LP Brazil’s export manager, also a qualified architect, is constructed using a range of LP products and doubles as a showroom for LP clients.
What is extraordinary about the Ponta Grossa site today is that a ‘frontier’ has been established, passing right through the heart of the original Masisa operation. On one side are silos and machinery halls in the green livery of Masisa, while across the line stand buildings in the orange and blue style of LP South America.
On the split site, LP manages most of the ‘vital fluids’ of the two mills, including the thermal oil facility, the railhead which delivers wood to both lines and the woodyard. Executives at other Brazilian panel companies are still puzzled that teams from separate businesses can survive so close together.
But, after eight months of cooperation, it seems managers and workers from each plant have established a smooth relationship and avoided treading on each others’ toes.
While LP South America has not escaped the ill effects of the global crisis, it is clear that the company, along with Masisa, has played a big part in creating an OSB market in the region.
Certainly the original pioneers, like Frederick Price, are justly proud of their role in transforming the housing technology in large parts of the subcontinent.

Despite the global economic crisis, the US giant, which launched the region’s first OSB mill in Chile five years ago, expects the panel will be in common structural use in Brazil in a little over three years’ time.
Only last year, LP South America established a powerful bridgehead in the region’s biggest country when it negotiated a complex deal to acquire Masisa SA’s 350,000m3/year continuous Dieffenbacher OSB line at Ponta Grossa.
In the longer term, LP aims to repeat in Brazil the OSB development process it employed in Chile with such success. That has seen two separate Chilean plants established – with one handling speciality OSB construction products – and rapid growth in the local market.
Today, LP Brazil is still focused on establishing the concept of wood frame housing in Brazil using OSB panels and on switching existing output at Ponta Grossa to structural products.
Strangely, economic pressures locally have helped the LP cause as house builders and the Brazilian authorities seek new technology to lower construction costs, says LP South America’s general manager Frederick Price, a pioneer of OSB development in the region.
“We are working to increment the demand for housing applications in Brazil... It’s going at a speed that’s good for us ...We are seen as a cheaper option. The [global] crisis is very bad, but it can still have a good side,” he told WBPI in a recent interview in Brazil.
If the market grows in the long term, as LP hopes, the company aims to take advantage of its ‘new’ continuous line to concentrate volume OSB panel output at Ponta Grossa. Then it plans to launch a separate batch-press line, primarily to make siding and other  speciality OSB products, elsewhere in Brazil, confirmed Mr Price.
The Anglo-Chilean executive is confident he will be able to sell around 70% of LP Brazil’s production in the huge Brazilian market after three years.
In July 2009, however, when WBPI visited LP in Ponta Grossa, the firm said the Dieffenbacher line was producing less than 40% of its total capacity in the face of the recession.
LP recognises that, while Masisa adopted a different approach to OSB production based on its furniture sector background, it did build up valuable local experience and created some promising OSB niche products.
But the US group only expects to continue producing around half the products that make up Masisa’s 10,000m3/month output. The company prefers to mainstream with the more familiar construction business.
“Some part of the Masisa legacy will remain with us in the future. We will continue about half the volume it was doing. The rest, we feel, doesn’t have a life,” said Mr Price.
His company aims to keep, for example, Masisa’s low-priced ‘Tapume’ board, used for building site hoardings; some of the heavy duty packaging products; and a new, stronger, version of the 22mm-thick ‘Ecotabua’OSB plank product used for construction walkways or table tops.
However, it is the construction potential for OSB that has attracted LP to move on to Brazil. With the national population due to soar by 41 million over the next 20 years
– and Brazil’s current housing deficit of an estimated 8 million homes – OSB seems to have a bright future there.
The decision to jump into the region’s biggest marketplace is a signal to South
America and beyond that the US forest products giant is committed to the region, stressed Mr Price.
The Brazilian plan is based on LP’s Chilean blueprint. The group came to Chile with OSB technology and set about ‘converting’ the construction industry to the new wood frame system creed.
It was not just a matter of selling to a new market, but “an educational thing”. Offering a mix of the right products, a competitive price, training and the right marketing, LP won over a receptive Chilean building sector. To date, the firm has trained around 7,000 carpenters overall to use OSB, explained the general manager.
The revolution in Chile, where 30% of new homes now use the wood frame construction system, was the result of a team effort between the OSB supplier, roofing providers and suppliers of metal structures, engineers and construction firms. In the space of a year, recalled Mr Price, the whole building system changed in Chile.
Today, around 90% of all social housing projects across Chile make use of OSB in construction, whereas four years back, usage was virtually zero, remembered another veteran of the campaign, LP South America’s operations manager Victor Flores.
He and Frederick Price were pioneers of OSB in Latin America when both were at the LP Chile predecessor Bomasil. It produced first panel at what is now LP’s Panguipulli mill in the Valdivia region in June 2001, recalled Mr Flores.
In early 2008, with OSB demand growing rapidly in Chile, group offshoot LP Chile brought on-stream its second national plant, 80 miles north of Panguipulli at Lautaro.
The ramp-up was rapid for the new 150,000m3/year batch-press line, which includes a modified secondhand press, formerly at LP’s US site in Montrose, Colorado.
But as the world crisis deepened, the market finally collapsed in November 2008 and the Lautaro mill, which had reached a capacity of 105,000m3/year, was closed in December pending an economic recovery.
In September 2009, LP was preparing to take a decision on where the South American operations should go next. Depending on market development it would either boost Brazilian production or restart the Lautaro mill.
Since then, the economic picture has brightened somewhat and the group hoped to relaunch the Chilean mill in January this year. Timing of a restart is important as mills must buy the necessary wood supply through the summer months – that is from November to March – to allow operation during that year.
The Lautaro start-up will rely on wood already acquired by LP in 2008 – and any it could buy in November and December 2009 – and production may be intermittent, with possible closure again from May to September 2010 and another re-start later, Mr Price warned when he updated WBPI in December 2009.
Once the Lautaro mill is fully operating again, the ultimate aim is for it to export around 50% of its overall output. While LP Chile sells some products to Brazil, other OSB is exported to countries including Argentina and Peru, the latter buying roofing and packaging products as well as shortterm housing components used to provide shelter for the mining sector.
Back in Brazil, LP plant managers and office staff have been settling in to their newly completed office block, located on the Ponta Grossa site that LP’s OSB plant still shares with Masisa’s MDF panel making operation.
The unique US$230,000 office building, designed by LP Brazil’s export manager, also a qualified architect, is constructed using a range of LP products and doubles as a showroom for LP clients.
What is extraordinary about the Ponta Grossa site today is that a ‘frontier’ has been established, passing right through the heart of the original Masisa operation. On one side are silos and machinery halls in the green livery of Masisa, while across the line stand buildings in the orange and blue style of LP South America.
On the split site, LP manages most of the ‘vital fluids’ of the two mills, including the thermal oil facility, the railhead which delivers wood to both lines and the woodyard. Executives at other Brazilian panel companies are still puzzled that teams from separate businesses can survive so close together.
But, after eight months of cooperation, it seems managers and workers from each plant have established a smooth relationship and avoided treading on each others’ toes.
While LP South America has not escaped the ill effects of the global crisis, it is clear that the company, along with Masisa, has played a big part in creating an OSB market in the region.
Certainly the original pioneers, like Frederick Price, are justly proud of their role in transforming the housing technology in large parts of the subcontinent.
Despite the global economic crisis, the US giant, which launched the region’s first OSB mill in Chile five years ago, expects the panel will be in common structural use in Brazil in a little over three years’ time.
Only last year, LP South America established a powerful bridgehead in the region’s biggest country when it negotiated a complex deal to acquire Masisa SA’s 350,000m3/year continuous Dieffenbacher OSB line at Ponta Grossa.
In the longer term, LP aims to repeat in Brazil the OSB development process it employed in Chile with such success. That has seen two separate Chilean plants established – with one handling speciality OSB construction products – and rapid growth in the local market.
Today, LP Brazil is still focused on establishing the concept of wood frame housing in Brazil using OSB panels and on switching existing output at Ponta Grossa to structural products.
Strangely, economic pressures locally have helped the LP cause as house builders and the Brazilian authorities seek new technology to lower construction costs, says LP South America’s general manager Frederick Price, a pioneer of OSB development in the region.
“We are working to increment the demand for housing applications in Brazil... It’s going at a speed that’s good for us ...We are seen as a cheaper option. The [global] crisis is very bad, but it can still have a good side,” he told WBPI in a recent interview in Brazil.
If the market grows in the long term, as LP hopes, the company aims to take advantage of its ‘new’ continuous line to concentrate volume OSB panel output at Ponta Grossa. Then it plans to launch a separate batch-press line, primarily to make siding and other  speciality OSB products, elsewhere in Brazil, confirmed Mr Price.
The Anglo-Chilean executive is confident he will be able to sell around 70% of LP Brazil’s production in the huge Brazilian market after three years.
In July 2009, however, when WBPI visited LP in Ponta Grossa, the firm said the Dieffenbacher line was producing less than 40% of its total capacity in the face of the recession.
LP recognises that, while Masisa adopted a different approach to OSB production based on its furniture sector background, it did build up valuable local experience and created some promising OSB niche products.
But the US group only expects to continue producing around half the products that make up Masisa’s 10,000m3/month output. The company prefers to mainstream with the more familiar construction business.
“Some part of the Masisa legacy will remain with us in the future. We will continue about half the volume it was doing. The rest, we feel, doesn’t have a life,” said Mr Price.
His company aims to keep, for example, Masisa’s low-priced ‘Tapume’ board, used for building site hoardings; some of the heavy duty packaging products; and a new, stronger, version of the 22mm-thick ‘Ecotabua’OSB plank product used for construction walkways or table tops.
However, it is the construction potential for OSB that has attracted LP to move on to Brazil. With the national population due to soar by 41 million over the next 20 years
– and Brazil’s current housing deficit of an estimated 8 million homes – OSB seems to have a bright future there.
The decision to jump into the region’s biggest marketplace is a signal to South
America and beyond that the US forest products giant is committed to the region, stressed Mr Price.
The Brazilian plan is based on LP’s Chilean blueprint. The group came to Chile with OSB technology and set about ‘converting’ the construction industry to the new wood frame system creed.
It was not just a matter of selling to a new market, but “an educational thing”. Offering a mix of the right products, a competitive price, training and the right marketing, LP won over a receptive Chilean building sector. To date, the firm has trained around 7,000 carpenters overall to use OSB, explained the general manager.
The revolution in Chile, where 30% of new homes now use the wood frame construction system, was the result of a team effort between the OSB supplier, roofing providers and suppliers of metal structures, engineers and construction firms. In the space of a year, recalled Mr Price, the whole building system changed in Chile.
Today, around 90% of all social housing projects across Chile make use of OSB in construction, whereas four years back, usage was virtually zero, remembered another veteran of the campaign, LP South America’s operations manager Victor Flores.
He and Frederick Price were pioneers of OSB in Latin America when both were at the LP Chile predecessor Bomasil. It produced first panel at what is now LP’s Panguipulli mill in the Valdivia region in June 2001, recalled Mr Flores.
In early 2008, with OSB demand growing rapidly in Chile, group offshoot LP Chile brought on-stream its second national plant, 80 miles north of Panguipulli at Lautaro.
The ramp-up was rapid for the new 150,000m3/year batch-press line, which includes a modified secondhand press, formerly at LP’s US site in Montrose, Colorado.
But as the world crisis deepened, the market finally collapsed in November 2008 and the Lautaro mill, which had reached a capacity of 105,000m3/year, was closed in December pending an economic recovery.
In September 2009, LP was preparing to take a decision on where the South American operations should go next. Depending on market development it would either boost Brazilian production or restart the Lautaro mill.
Since then, the economic picture has brightened somewhat and the group hoped to relaunch the Chilean mill in January this year. Timing of a restart is important as mills must buy the necessary wood supply through the summer months – that is from November to March – to allow operation during that year.
The Lautaro start-up will rely on wood already acquired by LP in 2008 – and any it could buy in November and December 2009 – and production may be intermittent, with possible closure again from May to September 2010 and another re-start later, Mr Price warned when he updated WBPI in December 2009.
Once the Lautaro mill is fully operating again, the ultimate aim is for it to export around 50% of its overall output. While LP Chile sells some products to Brazil, other OSB is exported to countries including Argentina and Peru, the latter buying roofing and packaging products as well as shortterm housing components used to provide shelter for the mining sector.
Back in Brazil, LP plant managers and office staff have been settling in to their newly completed office block, located on the Ponta Grossa site that LP’s OSB plant still shares with Masisa’s MDF panel making operation.
The unique US$230,000 office building, designed by LP Brazil’s export manager, also a qualified architect, is constructed using a range of LP products and doubles as a showroom for LP clients.
What is extraordinary about the Ponta Grossa site today is that a ‘frontier’ has been established, passing right through the heart of the original Masisa operation. On one side are silos and machinery halls in the green livery of Masisa, while across the line stand buildings in the orange and blue style of LP South America.
On the split site, LP manages most of the ‘vital fluids’ of the two mills, including the thermal oil facility, the railhead which delivers wood to both lines and the woodyard. Executives at other Brazilian panel companies are still puzzled that teams from separate businesses can survive so close together.
But, after eight months of cooperation, it seems managers and workers from each plant have established a smooth relationship and avoided treading on each others’ toes.
While LP South America has not escaped the ill effects of the global crisis, it is clear that the company, along with Masisa, has played a big part in creating an OSB market in the region.
Certainly the original pioneers, like Frederick Price, are justly proud of their role in transforming the housing technology in large parts of the subcontinent.

The vibrancy of the Asian panel markets over the past decade, particularly those in China, has long been commented upon. China has been an exciting place in which to observe the development and growth of what has become an enormous industry.
A similar sense of excitement has started to pervade the panel sector in South America, particularly in the ‘Southern Cone’ countries (Argentina, Brazil, Chile, and Uruguay), but especially in Brazil.
In recent years, we have seen rapid growth in markets, capacity and investment in the sector. Clearly Latin America is no China and the wood panel industry in South America is significantly smaller than that in China.
However, the sense of excitement in the region has been palpable – and comparable in many ways with that in China. There is a downside to this excitement (at least from an economist’s point of view). This relates to the almost grandiose, and close to irrational, business decisions that can be made when markets are close to euphoria.
In recent years, just as in China, the primary business model in Brazil (at least into early 2008) could arguably be described as “build it and they will come”!
Just as in the movie, “Field of Dreams”, where a baseball stadium was built in a cornfield with the expectation that paying spectators would appear as if from nowhere, panel producers in China and Brazil seem to have had a similar philosophy, or faith, that profitable business would simply show up as needed.
Certainly in China, business plans have often been awfully thin on substance about where market growth would be for the output being added by multiple new facilities. This approach was almost understandable when growth rates of 20% a year were typical and export potential seemed unlimited. But markets do mature, growth rates consequently slow, and good businessmen need to have a clear understanding of market potential when growth rates are not 20% annually.
In recent years we have seen rapid growth in South American panel markets, largely because of domestic market strength. Steady and sustained economic growth, the development of home ownership, and a growing middle class, have fuelled Brazilian demand for panels for furniture and fixtures.
The table below summarises Brazilian production of wood based panels over the past four years (2005-2008). MDP (‘medium density particleboard’) output jumped 27% and MDF production was up 47% over these four years. In both cases (unlike plywood) exports were a minimal contributor to demand.
However, over the same period, Brazilian hardboard production slipped 4% as MDF/HDF increasingly displaced hardboard in export markets (even as domestic hardboard consumption edged higher); softwood plywood output slumped 17% (largely because of plunging US demand – domestic consumption actually rose); and hardwood plywood production tumbled over 50% as tropical log supplies tightened and buyers increasingly steered clear of purchases of products manufactured from endangered tropical hardwood species.
Surging demand led to stronger prices and the best profitability in over a generation for many panel producers. The result was a boom in investment, both in new production lines and in complete new (greenfield) operations. Cambridge Forest Products Associates (CFPA) estimates that total Brazilian MDF and MDP capacity in 2005 was approximately 4.45 million m3.
As of 2008, effective capacity had climbed to 5.28 million m3 and will be close to 7.1 million m3 in 2009.
By 2011, once all the new lines have fully ramped-up to their rated capacity, Brazil’s combined MDP/MDF capacity will be approximately 8.85 million m3.
These estimates assume no closures of existing capacity. However, market conditions will probably dictate closures of at least some older capacity over the next few years. Even assuming that Brazil quickly shakes off the global economic recession in 2009, and domestic markets return to a growth path, it is hard to see how this growth will be sufficient to absorb all the new capacity that has, and is scheduled to, come on-stream through 2010. And with weak off-shore markets and fierce competition from other under- utilised panel operations in Asia and Europe, it is hard to see Brazilian panel producers exporting their way out of trouble.
In 2008, CFPA estimates that the production/ capacity ratio for MDP/MDF was close to 90%. To maintain that operating rate in 2011 with no mill closures would suggest production of 7.9 million m3; or 3.2 million m3 greater than in 2008 (a record year). This would represent average annual compound rates of growth of close to 20%, 2009-2011. We know that in the first half of 2009 production was down approximately 16% from the same period of 2008. Even assuming a stronger second half of the year than the first, total 2009 production will likely be flat to slightly lower than in 2008 (Figure 2). Consequently, it is highly unlikely that Brazil’s MDP and MDF producers will be able to sustain operating rates close to 90% over the next few years and will average operating rates of 65-70% or lower.
In CFPA’s assessment, the Brazilian panel industry will undergo a period of upheaval and consolidation. Already, in the matter of just a few months, we have seen two major changes in the structure of that industry.
First, the creation of a newly-enhanced Duratex company as it merged with Satipel to create one of the 10 largest global panel producers. This company’s operations are equipped with multiple modern facilities utilising relatively abundant plantation-grown fibre.
Second was the announcement in late August of Arauco’s acquisition of Tafisa- Brazil’s operations; this acquisition has vaulted Arauco into the position of a major panel producer in Brazil (as well as probably pushing this company close to being a Top 10 global panel player).
Further consolidation within the Brazilian industry is to be expected, particularly as lower panel prices put pressure on margins, reduce cash flow and push some operations into financial difficulties.
Consolidation will facilitate shake-out and rationalisation of the industry. In CFPA’s estimates, this will include the closure of significant volumes of MDP capacity in particular (around 450,000m3) and possibly of older MDF capacity.
In addition, ownership consolidation will facilitate more efficient distribution of production to the most efficient and lowest-cost facilities.
Even with this re-structuring, it will be difficult to push average production/ capacity operating rates much above 70% by 2011 through growth in Brazilian domestic demand alone.
However, companies such as Duratex and Arauco are better positioned to expand Brazilian panel exports, given their current already-significant exposure in North America, Mexico, Europe and parts of Asia.
Nevertheless, growth through increased offshore exports (as distinct from exporting to the ‘near-abroad’, ie the neighbouring countries within South America) will be difficult as Chinese and European MDF producers look for opportunities in South and East Asia and the other growth regions over the next few years.
Relatively strong currencies (in both Brazil and Chile) will also hamper an export-led growth strategy outside South America – especially one aimed at North American markets.
It is therefore hard to see an export-led growth strategy solving Brazil’s problem of excess wood based panel capacity, at least in the near term. Longer term, the problem will likely solve itself as Brazil’s domestic markets sustain relatively rapid growth over the next decade. This growth will be propelled by a rapidly expanding middle class, with larger discretionary incomes to spend on furniture, cabinets and fixtures in the new homes expected to be built over the period.
But the next few years will likely be rough for an industry that not too long ago thought the good times would never end. Economic cycles will continue: following the downswing, there will indeed be an upswing, but patience and deep pockets will first be required before the Brazilian panel industry again enjoys boom conditions.

The author, Bernard Fuller of Cambridge Forest Products Associates, (www.CambridgeForestProducts.com), welcomes your questions and comment s, which should be sent to: Bernard.Fuller@CambridgeForestProducts.com

The initial tremors shaking up the Brazilian panel industry, triggered largely by the global economic recession, saw the first stages of a long-delayed sector consolidation with the creation of two large new panel groups controlling a major slice of the Brazilian panel market.
Meanwhile, there were warnings of an aftershock later this year when fast expanding family-run panel producer Berneck SA revealed that it aims to acquire another player to form a third world-scale group in Brazil by the year’s end.
There is concensus locally that the market could sustain up to four big players.
Berneck boss Gilson Berneck has joined forces with a Brazilian private equity firm with access to foreign capital in his quest for a board producer with whom he can merge or form a joint venture. But, he warned, Berneck is determined to acquire the controlling interest in any panel partnership.
In the first move, the country’s top panel maker Duratex SA (see p38) agreed to merge with Brazil’s leading MDP (medium density particleboard) producer Satipel Industrial Ltda to form the biggest board manufacturer in the southern hemisphere. The giant group, retaining the name Duratex SA, will run seven continuous MDP and MDF lines and three for hardboard, with about four million m3/year capacity. It will hold 40% of the Brazilian market and has joint sales worth US$1.6bn.
Barely a month later, Chilean forest products giant Celulosa Arauco y Constitución SA finally pounced, snapping up Sonae Group’s isolated Brazilian panels-to-flooring business Tafisa Brasil SA in Piên, Paraná state in a US$227m deal.
Tafisa Brasil, which had been up for sale for some time, runs two continuous MDF lines with a joint 342,000m3/year capacity; a single 270,000m3/year continuous MDP line and a laminate flooring line. The move consolidates Arauco’s position in Brazil where its offshoot Placas do Paraná has MDF and MDP capacity in Paraná state of around 530,000m3/year.
Arauco, which still runs small-batch MDP lines in Curitiba that it inherited with Placas, will gain a modern continuous MDP line at Piên, while Tafisa, with no forest of its own, will benefit from Arauco’s growing national plantation reserves. Now, Placas is likely to close down the last single-opening MDP press lines in Curitiba, which have held the group back in Brazil’s particleboard market.
Since the global economic crisis hit Brazil, there has been a flurry of activity among panel makers who are keen to avoid being squeezed out of a shrinking market and determined to negotiate a role in the new-look panel industry of the future. Speculation is rife about who is currently in talks with whom on some fresh merger or joint venture.
What is clear is that the crisis caught the Brazilian industry unawares, just as many producers were completing ambitious capacity expansion schemes. The sudden downturn struck in September 2008 after Brazilian firms had enjoyed a five year market boom when MDF growth averaged 15% per year.
In the final quarter of last year and the first of 2009, panel manufacturers saw their sales volumes crash by 20%, with exports to the US and Europe particularly badly hit. Brazil’s domestic market also felt the recessionary draught, according to the country’s wood panel manufacturers association ABIPA.
Companies have been forced to cut their plants’ work shifts and slash production. Employees at some Brazilian panel plants have been laid off or reduced to carrying out essential maintenance work in recent months in the face of the market slump, the association said in July.
After a string of expansion projects for both MDF and MDP, panel producers were facing up to the prospect of continuing over-supply. The sector’s main customers in the Brazilian furniture industry also suffered badly from the international slowdown, not least in its southern zone at Bento Gonçalves where factories are focused on export business.
ABIPA has spent much of this year attempting to ease the plight of the recession- hit panel industry. Its efforts have focused chiefly on lobbying the Brazilian government for economic aid to bump-start sluggish consumer spending.
Early this year, as part of an economic stimulation package to counteract the worst effects of the slowdown, the government offered tax relief to customers of the car, construction and domestic appliances sectors. Since then, panel and furniture industry leaders have pressed the government to extend temporary relief from the industrial products tax (IPI) to their markets.
The Brazilian economy has benefited from a gradual fall in the country’s still high interest rates in the crisis period up to June 2009. Government aid to the banking sector also helped to release more credit in order to stimulate consumer sales.
Despite the effects of the crisis, there is still genuine confidence in some quarters in the longer term growth prospects for the domestic panel market. One executive talking up the market picture in July was Satipel’s commercial vice-president Roberto Sczachnowicz. “The Brazilian market has been better than foreign panel markets for the last year. It will continue to be so for the next couple of years,” he told WBPI in São Paulo.
Mr Sczachnowicz, named as supply chain executive director of the ‘new’ Duratex SA, based his confidence on Brazil’s huge housing deficit and a government scheme to build a million new homes. Panel makers are backing a programme called ‘Minha Casa, Minha
Vida’ (‘My Home, My Life’) through which state-subsidised home loans will help lower-class Brazilians buy homes complete with fitted furniture.
“I see this [scheme] creating a lot of market opportunities for us....domestic consumption will keep growing in the years ahead,” he said.
Brazil’s bulge in new panel capacity was clearly visible by mid-2009 as the last three big new MDP continuous press lines came on stream in Brazil’s southernmost state of Rio Grande do Sul.
In May, Masisa do Brasil Ltda launched its 750,000m3/year Dieffenbacher press line at Montenegro, while Satipel’s new 700,000m3/year Siempelkamp line launched three-shift production in mid-June. Meanwhile, the Isdra Group-owned firm Fibraplac Chapas de MDF Ltda started commercial output on its first MDP line, a 500,000m3/year Siempelkamp press unit, in July in Glorinha.
The recession, and consolidation moves, coincided with the end of Brazil’s latest cycle of big capacity expansion projects. But, there is one further scheme – the 350,000m3/year Dieffenbacher HDF line being built at Salto, São Paulo state, by hardboard and particleboard producer Eucatex SA (see p31). It is due on-stream early next year.
Meanwhile, industry sources are pointing to family-owned Fibraplac as an attractive prize in a hunt for a further merger or acquisition target. A relative newcomer to panel making, Fibraplac over six years has expanded rapidly to assemble a complex including two continuous Siempelkamp MDF and one MDP line with joint capacity of around one million m3/year. It also runs three low pressure melamine laminating lines at Glorinha.
Like several other Brazilian players, Fibraplac has temporarily abandoned further expansion projects because of the recession. In its case, there was a plan for a third MDF line on a second site further south near Rio Grande port. Other postponed plans include Duratex’s scheme for a giant one million m3/year MDP line in Itapetininga.
The panel makers have, though, glimpsed a shaft of light from the end of the crisis tunnel with some benefit being felt in the Brazilian market resulting from government intervention and the natural upturn felt during the second half of the year.
While the big boys of the sector struggle for power, there are still Brazil’s small panel newcomers, like the plywood converts (see p28), who are struggling for survival. The big question is, how will the panel industry’s disparate band of producers manage to share out the limited market cake? Casualties are inevitable.
But the hope is that, once the restructuring tremors have subsided, Brazil’s new-look industry will emerge leaner and fitter to meet the huge market challenges in South America’s biggest state and beyond.

Duratex has expanded, not just in terms of its recently-announced merger with Satipel Industrial, but with the launch in June of a huge, 77m-long, continuous MDF press line – the world’s longest to date – at its Agudos plant.
Duratex originally planned to install the 750,000m3/year eucalypt-based Siempelkamp line back in 2007, when markets in Brazil and abroad were booming. In the past five years, domestic sales of MDF have risen at up to 15% per year thanks to strong furniture industry growth.
Then, just as Duratex and other Brazilian MDF producers proudly made ready to launch their new lines, the global economic crisis hit, slamming the boom into reverse and leaving panel manufacturers saddled with substantial overcapacity. Duratex was forced to rethink its short-term plans.
Originally, the new MDF line was part of the company’s strategy to dedicate production of thin and standard thickness fibreboard products to different lines. Duratex also operates a 250,000m3/year pine based MDF production line at Agudos and a 450,000m3/year MDF/HDF unit at its Botucatu mill.
“The strategy was to have this big [new] line to produce basically 6x9ft products from 12-18mm [standard MDF], and to concentrate the Botucatu MDF line and Agudos Line I on special [thin] products,” explained Carlos Gama, Duratex’s engineering, development and environment manager.
Speaking soon after Agudos MDF II start-up in late June, he told WBPI on a visit to the plant that the plan was to run the big line eight hours a day through to the end of August before the product’s planned market launch at that time.
“Then, depending on the state of the market, we will be ready to increase the output,” the executive explained.
The super-press line comprises wood-yard and refining equipment provided by Andritz; Siempelkamp machinery from the dryer up to the end of the line, with the sanding section from Steinemann. The biomass energy plant was supplied by the Belgian company Vyncke NV.
Duratex was hopeful that Brazilian domestic demand for MDF, which fell in the first half of 2009, would benefit from lower interest rates and a government stimulation package in the final six months of this year. The home market is normally more buoyant in the second half of the year anyway.
However, the global recession has left its mark on even the strongest of Brazil’s panel manufacturers.
São Paulo-based Duratex is well aware that the sector’s recovery will not be short or sweet, and it will take the company several years before its sizeable panel production capacity is fully sold.
For Duratex, 2009 has already been a momentous year. The start-up of MDF II coincided with news that the company is spearheading a long-awaited industry consolidation through its merger with Brazilian MDP (medium density particleboard) major Satipel Industrial SA (WBPI Aug/Sept 09, p5). The new group, to be named Duratex SA, will have an overall capacity of around four million m3/year and rank as the biggest wood panel manufacturer in the Southern Hemisphere.
At the end of August, shareholders of both companies gave this deal the green light and the new US$1.6bn ‘super group’ was formed. In the meantime, directors and senior managers from the two companies have been discussing in detail the integration programme.
Asked about the new group’s likely future direction, Alexandre Coelho, Duratex commercial director told WBPI: “Right now we are consolidating our recent investments – Satipel and Duratex and we are focusing on integration”.
It is Mr Coelho who, as the ‘new’ Duratex’s wood business commercial director, will take on the challenge of marketing the group’s enlarged product portfolio in Brazil and abroad. He will also take on a wider industry role next year as president-elect of the country’s wood panel association ABIPA.
The new group has already given a clue as to how it means to recover business lost following the global economic setback. It is targeting foreign markets around the world in a concerted bid to expand exports which stood mid-year at a combined total of just 5% of sales.
“Our goal is to become the lowest cost producer in the world..,” the group’s chairman Salo Seibel and its ceo Henri Penchas revealed in a joint statement at the time of the deal announcement.
The first major move in years to consolidate the industry was warmly welcomed in Brazil as a near perfect marriage between Satipel and Duratex. Their respective operations complement each other in terms of plants, products, customers, geographic spread and continuous line technology, while each brings around two million m3/year of panel capacity to the partnership.
The advent of MDF II at Agudos represents a US$150m chunk of a substantial US$350m Duratex investment programme, which also covers the construction of a US$50m formaldehyde and resin plant at the site and the purchase of new forest land nearby.
The company expects to make a significant cost saving by adding the Perstorp resin plant which will also supply raw materials to the Botucatu site 60km away. The plant equipment arrived on site in July and the unit is set to start up this December (09) and will deliver chemicals fully from early 2010, forecast Mr Gama.
The forestry investment involved the acquisition of the Lençois Paulista area close to the Agudos plant, comprising 18,000ha of forest land to provide additional planted eucalypt wood to feed the new MDF II line.
For years, Duratex has maintained and expanded its tree plantation resource around its panel plants in São Paulo state. Today, it owns more than 123,000ha of forest located on average 55km from the plants, ensuring it has the lowest wood cost in the industry.
Duratex is in the process of switching its forest base from pine to rapid growing eucalypt trees. New plantations are now of eucalyptus, though the firm has sufficient pine wood to fuel the MDF I line at Agudos for up to seven years, explained Mr Gama.
In the past year, Agudos has seen further spending on panel finishing facilities. A second low pressure melamine line with a 180,000m3/year capacity was supplied by Siempelkamp in July 2008, and a third line with the same output was being purchased for the site this year.
This investment, along with the installation of a small mouldings line, able to turn out five million moulded skirting board strips per year for Duratex’s laminated flooring products range, demonstrate the importance the firm now attaches to value-added products.
“We are not only a commodity [products] company, but an added-value company too. We started to develop a new market and business in civil construction last year,” pointed out Mr Coelho. His company also planned to launch a door components business this year, he added.
A little over a year ago, Duratex revealed it was planning another revolutionary panel project when it announced its intention to build the world’s first one million m3/year particleboard plant. With its heavy focus on expanding fibreboard capacity and developing special thin MDF boards, the company was felt to be abandoning MDP. So Duratex’s answer to the market was the massive panel line scheme for its Itapetininga site.
The firm already operated a 500,000m3/year particleboard line, using 100% eucalypt fibre, which it had introduced back in 2000.
But late last year, Brazil was overtaken by the global recession and Duratex quickly announced it would postpone the huge Itapetininga line because of the international downturn. That decision proved wise in the light of the unforeseen merger deal with Satipel, whose wellinvested MDP operations to the north and south of São Paulo provided the balance its partner sought.
Duratex remains one of two major global suppliers of wet process hardboard, along with its fellow eucalyptbased panel maker, Eucatex SA.
However, last year, Duratex finally closed down its second hardboard production site in Jundiai, near São Paulo city. Duratex blamed a combination of the age of its three Jundiai 1950s lines and urban creep preventing expansion on the 150,000m3/year site for the shutdown. But export-reliant hardboard also suffered in 2008 from adverse exchange rates and the world recession.
The company still runs three newer wet process board lines, dating back to the 1970s and 1980s, with a 300,000m3/year output – two thirds of its former total capacity – at Botucatu. It was forced to switch the bulk of its business to the Brazilian market, according to Duratex’s commercial operations manager Giovanni Grossi.
Meanwhile, Duratex was developing special thin MDF products, including dry process super density fibreboard (SDF) and HDF panels which have begun to substitute for hardboard in certain market applications. The company has found that it is beginning to compete against itself with both hardboard and HDF in the marketplace, the commercial executive admitted.
Hardboard at home and abroad is still hugely profitable for its Brazilian producers and appears to have a future despite attempts to find an ideal replacement. “Hardboard is still recognised as a special product for certain applications. We intend to continue with the hardboard process at Botucatu, no doubt,” confirmed Mr Gama.
The MDF line in Botucatu was originally installed to develop the thin HDF and SDF products. Although SDF, devised as a resin-free substitute for hardboard, entered the market two years ago, 80% of the line’s output in mid-2009 was still standard MDF. HDF and SDF had a 10% share each, according to Duratex.
Managers are convinced that greater economies of scale, attained partly through its merger with Satipel, will allow it to produce bigger thin board volumes and prove that SDF is the most cost-competitive product, said Mr Grossi.
“We have to get volume, scale and competitiveness in the cost of production in HDF lines,” he declared. Once SDF is fully developed and can prove its value in the market, then the days of wet process hardboard could be numbered.
“SDF, at the right time, will certainly be the right [thin board] product to switch to in traditional hardboard markets, asserted Mr Grossi.
But for now, the well-tried characteristics and value of hardboard as a painted product are still very much in demand in the doorskin and civil construction markets, in Europe and the US particularly.
For Duratex, even the dark clouds of global recession have a silver lining, since it is clear the economic crisis spurred Brazil’s fragmented industry into the radical, but long overdue, consolidation process. Once the integration process with Satipel is complete a model group will emerge, leaner and fitter to take on the challenge of sector development.

Today, the Berneck group operates a modern, integrated, industrial site near Curitiba, equipped with a new 342,000m3/year MDF line, a 624,000m3/year MDP (particleboard) line and a 300,000m3/year sawmill. A second site in Santa Catarina state is earmarked for a further complex, eventually to include two more panel lines – one for MDF, the other for MDP – each of around 500,000m3/year.
By any standards the rise and rise of Berneck over the past decade has been little short of stunning. Now its proud and tenacious president, Gilson Berneck, has set his sights on controlling one of a handful of giant national panel players emerging in the sector’s latest round of consolidation.
He admitted his company, with the help of foreign capital, was seeking to buy or joint-venture with another of the country’s seven remaining independent panel makers after two big merger deals were announced.
In the first, Brazil’s top MDF producer Duratex snapped up leading MDP maker, Satipel Industrial SA to create the largest panels group in the southern hemisphere. In a second deal, powerful Chilean forest products giant Arauco Celulosa y Constitución SA bought panels and laminate flooring manufacturer Tafisa Brasil from the Portuguese Sonae Indústria group.
Speaking to WBPI recently, Mr Berneck revealed that, in partnership with a Brazilian investment company, he planned to reach a deal with another player before the end of this year. “We will be one of the three or four big [panel] groups,” he declared. He stressed his firm would only sign an agreement that gives Curitiba-based Berneck a controlling interest in the resulting group.
“We are open to discuss any situation: we could buy or we could make a joint venture.....[But] maintaining control is very important to us at this time,” he told the magazine in July. But the entrepreneur remained tight-lipped on his likely takeover targets.
At that time, the president hinted that Berneck was in talks with Tafisa Brasil with a view to a joint venture deal. However, Arauco subsequently closed that deal.
One other independent player, not yet part of three or four big groups expected to emerge from the current flurry of mergers and acquisitions, is the southern MDF and MDP producer Fibraplac Chapas de MDF. A relative newcomer to the panel sector, it has grown rapidly in the past six years and now runs two MDF lines and one newly-launched MDP line at Glorinha, Rio Grande do Sul.
Former plywood maker Berneck only entered the MDF business last October when the company started up the 342,000m3/year Siempelkamp ContiRoll line at its industrial complex in Araucaria, close to the Paraná city of Curitiba. The launch came just as Brazil began to feel the worst effects of the global credit crunch and recession.
The 950m3/day thin MDF line’s start-up had been delayed due to the late arrival of the site’s big new boiler, when its São Paulo suppliers Sermatec/HPB were overwhelmed with an order backlog associated with the biofuels revolution in Brazil.
With the domestic panels market depressed since the start-up, Berneck was selling barely half the MDF line’s normal capacity up to mid-year 2009. The firm has concentrated on producing thin fibreboard, for which the line was specifically designed, with around 6% of its overall output feeding weak export markets in Latin America.
The Brazilian market was not helped by a sizeable national MDF capacity hike in 2008.
Berneck was one of three producers to bring new lines on stream within months of each other, exacerbating an increasingly depressed market situation.
“It’s difficult to say when the market will take off again. I think thin board in Brazil is not increasing, but there is enough to keep the plant operating,” commented MDF line manager José Luis Dieguez when WBPI visited the plant in July. On that day, production was at a standstill as Berneck took advantage of a slack market to carry out essential repairs to damaged boiler pipework resulting from an installation fault.
However, Berneck has discovered a silver lining to the gloomy market clouds. The advent of thin MDF there has enabled it to target markets where finished hardboard is predominant. High density fibreboard (HDF) has also helped revive the fortunes of  Berneck’s 11,000m3/month Hymmen finish foil line, which had lost out to board painted by the customers.
Eucalypt hardboard manufacturers Duratex and Eucatex supply a substantial domestic thin board market with ready painted panels, used particularly in the furniture and automotive interior paneling sectors.
“We are making thin [MDF] board with finish foil that substitutes for painted hardboard because of it’s better quality and the price is almost the same,” explained Gilson Berneck. “Now we have thin board, the finish foil line is almost full.” In July, the firm was preparing to increase production, working three shifts instead of two.
Based on its success with finished thin board, Berneck said it planned to raise the share of HDF produced on the MDF line from around 50% to 75% over the next 12 months. The advance of HDF in those markets has led to a fall of around 25% in the Brazilian hardboard price. Customers prefer pine HDF for its two-smooth-sides finish and lighter wood colour, according to the Berneck president.
Looking further ahead, Berneck is well prepared to expand its fibreboard business when the dark clouds of recession finally lift and Brazil’s vibrant MDF market recovers its former strength. The panel maker now plans to launch its second Siempelkamp ContiRoll MDF line in the richly-forested southern state of Santa Catarina by the end of 2012.
Once the 450,000m3/year line, with a 40.4m press, is completed on a one million m2 greenfield site at Curitibanos, Gilson Berneck aims to use it to turn out thicker standard MDF panels. At that time, the smaller MDF I line in Araucaria will be dedicated to thin board production, he explained.
Berneck’s original plan – in better times – was to install a big 850,000m3/year MDP continuous press line at its southern site. Its Araucaria MDP line was almost fully sold and demand was still strong in what was then a booming national marketplace. The eventual plan was to duplicate the integrated Paraná site in Santa Catarina.
Then, Gilson Berneck had to reassess the scheme on news that Duratex planned to build a huge one million m3 per year MDP line at its Itapetininga site in São Paulo state. Since Berneck had already bought the land and begun site preparation, the firm decided instead to install a 500,000m3/year MDF line first in Curitibanos, alongside a new lumber mill.
“With the MDF line and lumber business [on site] at the same time, we could co-generate energy and make lumber and thick MDF and produce just thin MDF in Curitiba,” said the president. Earthworks are now complete on site and the MDF line is on order from Siempelkamp.
The irony of Berneck’s re-think is that the Duratex MDP plan for a massive São Paulo line was later shelved because of the worsening economic crisis worldwide.
It is unlikely Berneck will go ahead with its second MDP line at Curitibanos within the next five years, after other Brazilian producers launched three new particleboard plants at sites in the south of the country.
Gilson Berneck made clear the extra capacity planned for Santa Catarina is essential for the company if it is to become part of Brazil’s three or four large panel making groups of the future.
When WBPI visited the Araucaria plant, its existing Siempelkamp MDP line was still feeling the ill effects of the recession apparent in Brazil’s furniture sector since the end of last year. In mid-2009 that line was producing board at around 75% of line capacity.
It was in April 2006 that Berneck invested around US$3m to upgrade the wood preparation area in order to increase the capacity of that Siempelkamp line to almost 1,800m3/day. Since then, the board line has seen little change.
In view of market conditions and new capacity added by MDP competitors in the south, the firm expected to continue lower output for some time to come, although not below 70%. Gilson Berneck suggested it could be at least three to four years before his company’s MDP production returns to 100% capacity.
In the past two years, Berneck’s main Araucaria industrial site has seen substantial investments and big changes in the woodyard, wood processing and energy areas. Much of this came about as a result of the expansion of the lumber business and the addition of an MDF plant.
Key to the changes has been the addition of the MDF line, which required a woodyard expansion. Formerly, the site trucked in short, 3m long, ready-debarked pine logs from
Berneck’s plantations and the wood for the particleboard line was processed in Hombak flakers.
Today, a big secondhand debarker, bought from Duratex, has sufficient capacity to prepare unstripped pine logs needed for both panel lines. Earlier this year, Berneck was installing three new Pallmann chipping lines in place of the old processing equipment and the panel business uses good quality chips from the company’s big new sawmill next door. Meanwhile, bark and other wood waste from third parties provides material to fuel the biomass boiler.
The arrival of MDF production has meant a significant increase in the site’s energy consumption. Now, thanks to the integration of the different operations, Berneck said it is capable of generating a little over half of all the site’s energy needs.
“We are in a fortunate position in that we have an integrated site and are able to use the steam in all our processes to generate our own energy,” explained Gilson Berneck’s son
Daniel who was responsible for the expansion of the sawmill operations.
“We are capable of generating 13MW of electricity here from our own steam consumption and we consume 22MW so that’s almost half and half.”
In July, Berneck was completing the installation of a new electricity converter station on site to enable the firm to sell all the power it generates to the grid and buy back the electricity it needs at higher voltage, at a price advantage.
Berneck is proud of its new lumber operation with a capacity of 240,000m3/ year. Until this year, its wood drying capacity was limited but, with the addition of five new kilns, the unit will be able to dry all wood by the end of this year. Exports represent about 70% of lumber output, while the rest feeds the home market, but the firm expects business will settle back in due course to a 60:40 percentage balance in favour of export.
A small offshoot wood products business maintained by Berneck manufactures teak sawn lumber and panels fed by the former plywood company’s 3,000ha teak plantations in Mato Grosso do Norte. Planted teak, which takes around 35 years to mature in the region, makes high-added-value products. The firm is still only sawing plantation thinnings.
Berneck, in common with most of Brazil’s other wood panel manufacturers, has suffered the ill effects of the global downturn and the financial crisis which overtook even vibrant Brazil. The company saw its profit of US$35m in 2007 shrink last year to just US$26.5m.
Nevertheless, for Gilson Berneck and his family there is no going back. Their broad experience of the forest products business, along with a ruthless determination to stay at the top of Brazil’s panels industry, come what may, should ensure Berneck’s survival at a time of radical change.

MrMaluf’s emphasis on stimulating market demand through developing a wide range of distinctive finished panel products has helped Eucatex remain a leading sector player, although it only recently emerged from several years in Brazil’s equivalent of the US Chapter 11 bankruptcy protection.
The panel business is not about moving a commodity, but rather creating a ‘desirable’ product to appeal to the customer and result in fresh demand, explains Mr Maluf. “The great challenge in the end is to make a product, not simply a board,” he said.
“We have many worldwide patents taken out in recent years and we are still making new products to compete in a market, where other companies need at least three to four years to copy,” said Mr Maluf when he spoke to WBPI in São Paulo in June.
An established MDP (medium density particleboard) and wet process hardboard producer, Eucatex is now on the verge of adding dry process fibreboard products to its panel portfolio. Initially, it plans to launch a 350,000m3/year plant for thin HDF/MDF early next year, and is studying a second major project to build a 500,000m3/year eucalypt MDF plant, possibly in Mato Grosso do Sul state.
The company’s long-awaited shift into MDF/HDF marks another innovative step for its executive president. His first plant, currently taking shape in Salto, São Paulo state, will focus on making 2- 9mm HDF board and painted, melamine laminated and flooring products.
“There’s no plant in Brazil that specializes in this niche market. We understand we’ll be unique in that from 2-9mm we’ll offer the best cost and be producing the best [HDF] product available in Brazil,” explained Mr Maluf, whose family remain significant Eucatex shareholders.
He said the new plant will target a Brazilian market for thin fibreboard, under 10mm thickness, currently about 30,000m3/month, representing 15-20% of the total MDF/HDF market. Its quality HDF product will be aimed at applications where, because of Brazil’s climatic variations and humidity, MDF has been used incorrectly, he explained.
Examples of these include door jambs, moisture-sensitive furniture applications, such as in kitchens, and some mouldings, according to Mr Maluf. “We know that MDF.....is being used in the wrong way in several applications. Later on, we think that this will be recognized by the market,” he told WBPI.
As a major global exporter of hardboard, Eucatex intends to sell a significant proportion of its new HDF product abroad; despite the world economic crisis, the company saw its hardboard exports during the first quarter of 2009 soar by more than 100%.
Mr Maluf reckons his company will have sufficient capacity on its new HDF line to export up to 40% of its output, not least because Eucatex has attracted potential customers for it. This year the panel maker was exporting its products to 37 countries around the globe, the executive president estimated.
Despite its strong export record, São Paulo city-based Eucatex has not remained unscathed in the worldwide recessionary storm which has blown through Brazil. At home, the furniture sector was at a low ebb mid-year, with plummeting sales made worse by the credit crunch and sky-high interest rates and with no sign of hoped-for government tax relief.
In the traditionally slower first half-year, the resulting shrinking demand and low prices saw Brazilian panel makers shutting down for periods and laying off workers. Eucatex saw sales in April and May fall dramatically, though the figures for the first half year showed MDP products, including laminate flooring, down by under 3%. That compared well against the MDP market, which fell by 18% during the period.
Now the company is firmly focused on completing and launching its HDF/MDF plant. Dominated by its 21m long Dieffenbacher continuous press, with a 2.75m panel width, the new line is equipped to produce both HDF and standard MDF, but will concentrate on thin HDF.
Wood preparation and the refining section of the line are being supplied by Metso of Sweden, while the glue kitchen and blending units are from Pal and Imal of Italy, with saws, transport and finishing operations supplied by another Italian company, EMG.
Eucatex intends to start up the new, improved woodyard operation including chipping, wood handling and storage by the end of 2009. The HDF/MDF plant is scheduled to roll no later than the second quarter of next year, but recent projections have the start-up as soon as February 2010.
The panel plant is another example of Maluf innovation. Eucatex is breaking with the trend set by most of Brazil’s existing MDF producers of installing Siempelkamp technology. Instead, it chose a Dieffenbacher continuous press line. In addition, the new plant includes several unusual features in the wood supply and processing and panel forming areas.
Among these is the inclusion of high grade waste wood fibre in the HDF line furnish, drawn from Eucatex’s 20,000 tonne/month recycling plant at the Salto site. The recycling unit already fuels much of the energy needs of the site’s two hardboard lines, as well as providing material for the hardboard process.
Eucatex originally installed the US$15m recycling line to provide biomass for its heavy energy consumption, as well as offering a regular source of production fibre in the face of soaring wood prices and the firm’s own limited plantation resource.
Claimed to be the biggest wood recycling line in South America, the unit was last year turning out around 10,000 tonnes of material a month, 80% of it going to the energy plant. The new HDF line is due to use between 10-15% of recycled fibre in its furnish, according to Mr Maluf.
“This is another innovation we’re using in Brazil with great success. We save the best [recycled] wood for the product and the worst wood for energy. In Europe recycled wood use is very common, but not here.
“It’s saved us about US$50m in investments in plantation land and forests every year,” beamed the delighted Eucatex executive president. This big saving in capital costs results in a greater return on the firm’s overall investment, he added.
Another feature of the new woodyard being carved out of the crowded industrial site is more familiar at a paper woodpulp mill. Instead of employing large closed silos for chip storage, Eucatex is making use of a Metso-supplied open stack reclaimer system for handling the material.
This is a first for the fibreboard business, claims Mr Maluf, who argues that for this product, there is little point in protecting chips from humidity when you need to inject steam and water into it in the defibrator. Only in the US has the panel industry made limited use of stack reclaimers – in OSB manufacture – suggested Mr Maluf.
Much depends on the success of the innovative HDF project as to how, and how fast, Eucatex will develop as a fibreboard manufacturer. For the company, this plant represents a major experiment where it will test a number of novel process modifications and cost-saving approaches.
Eucatex is particularly targeting the high cost of resins used in fibreboard production. It is drawing on its 50-year experience of manufacturing wet process resin-free hardboard to modify the use of a raw material which can often cost more than the wood, revealed Mr Maluf.
He is reluctant to divulge details of modifications made to the new board line. Suffice to say that Eucatex has added several pieces of equipment on the line itself to “save resin” and to test different types of resin in the process.
“We have good hardboard technology experience which will allow us to use this technology in the HDF plant,” the president told WBPI in June.
His company’s priority right now is to complete the HDF/MDF project and to test the process innovations in the line to establish the costs involved and what products Eucatex can make.
“The HDF line is going to be a laboratory-laboratory in the first year for a big new plant we are planning,” declared Mr Maluf.
Again, he stressed that Eucatex is definitely not in the business of producing just another MDF panel. “If we decide to build a new [MDF] line, that will be different from what you now have in Brazil, like our first [HDF/MDF] line. [With that one] we have the first
Dieffenbacher press in Brazil for fibreboard,” he emphasised.
What of the future for Eucatex’s original panel business – hardboard? The company is now one of a dwindling band of producers of the wet process product that nevertheless continues to attract surprising demand from export markets around the world. This year saw Brazil’s other hardboard champion, Duratex, close three press lines at its second hardboard plant in Jundiai.
Despite his firm’s latest investments in thin HDF, Mr Maluf is emphatic about his commitment to hardboard. “We’re not going to drop out of hardboard. It is a very good product: low-cost and very profitable,” he responded.
Eucatex runs two Washington Ironworks press lines – among the biggest in the world, feeding a growing clientele in Brazil and around the globe with eucalyptus- based hardboard. The lines, which produce panels around the clock, continue to give good service after a series of modifications over the years.
“We are working year by year, upgrading our big hardboard lines. We are still working on that and will continue to do so next year (2010),” said the Eucatex president.
Looking ahead, Mr Maluf believes the first MDF production line will need to run for “at least six to seven months” before Eucatex can begin to make a preliminary assessment on how best to develop MDF products. The president anticipates his company will make a final decision on its big plant project in 2012.
Commenting on the first of this year’s consolidation moves in the Brazilian panel industry, Mr Maluf welcomed the merger of MDF and MDP leaders, Duratex SA and Satipel Industrial SA, as “healthy” for the market. Speaking in late June, he predicted further takeovers in Brazil.
But, where does he see Eucatex fitting into this new order, dominated by a few large Brazilian industry players? He was coy about revealing details of his company’s long-term strategy, but was confident it was in for the long haul.
“You have to know your business and know clearly where you want to be in five to 10 years from now. We know exactly where we want to be,” he declared. He expects his company to grow in coming years, though his target for Eucatex is not simply to be big, but to achieve greater profitability.
Growth could mean acquiring or merging with another panel producer in the next three to four years, he admitted. “But if we don’t merge or buy, and we see (market) space to put our products, we will set up a new plant,” said the executive, adding that demand for the products it creates is the most important thing for Eucatex.
Acknowledging the firm will face stiffer than ever competition in future, its president is bullish about its long-term strategy. Mr Maluf aims to emulate “companies like Apple” and others in the electronics and automotive sectors who are in huge competitive markets.
“They create products that make people desire those products,” explained the Eucatex boss, who appears determined that his independent market approach will guarantee a leading role in Brazil’s new-look panel making sector.

Even in Brazil the international credit crunch and short term market uncertainty, magnified by the launch of fresh capacity schemes by big MDF players, are now deterring more newcomers from actually launching ambitious investment plans.
While two plywood companies in southern Brazil, Indústria de Compensados Sudati Ltda and Indústria de Compensados Guararapes Ltda, both of Palmas, Paraná state, did each launch a new Chinese-built MDF line of 180,000m3/year early this year, other firms have shelved their new panel plans for the moment.
Even Sudati and Guararapes, who could have picked a better time to invest in an unfamiliar market, are finding the going tough at their respective plants in Otacilio Costa and Caçador, both in Santa Catarina state. Each one is operating a line supplied by Shanghai Wood Based Panel Machinery Co (SWPM).
Although the crisis was undoubtedly biting in Brazil early this year, the new players seemed to have found market niches for some of their output and in mid-year continued to invest in line and product enhancement. They strenuously denied industry rumours they were struggling and ready to halt production in the face of fierce competition from the big players.
Far to the north, at the tropical heart of Brazil’s traditional hardwood plywood producing region in Pará state, another group is proceeding with its own novel MDF project. Floraplac Industrial MDF Ltda, part of Pará’s plywood and forestry group Rio Concrem Industrial, plans to launch that region’s first MDF line using eucalypt and planted paricá, a high density, fast growing local native hardwood.
Floraplac too is employing Chinese technology, with a similar-sized line, also provided by the Dieffenbacher subsidiary SWPM, at its plant now under construction in Paragominas, Pará. In March 2009, the MDF line arrived in Brazil aboard a Philippine ship from China and is expected to be ready to produce panels between March and November 2010.
Floraplac, which owns 30,000 hectares of plantation paricá – South America’s biggest – aims to build up sales in Brazil’s fast-developing north east. It will take advantage of its location, close to this burgeoning marketplace, while competing MDF producers are forced to ship huge distances overland from southern Brazil.
It is this northern MDF pioneer that has caught the attention of some leading Brazilian panel makers, all too ready to dismiss as illusory the plywood makers’ dream of sky-high MDF prices obtained with the aid of advanced, low cost, trouble- free Chinese technology.
“They [would be MDF producers] were attracted by the MDF price and the low price of Chinese equipment. But MDF prices are dropping 20% this year.....they will discover later on that Chinese deals are only good for the Chinese in the long term,” declared Flavio Maluf, president of panel maker Eucatex SA. But Floraplac could make a go of it in the fast expanding northeastern market, he concedes.
Although one southern would-be MDF convert, Maseal Indústria de Compensados Ltda, seems to have pulled out of a promising Chinese MDF mill plan in Mato Grosso do Sul state at the last moment, another four Brazilian plywood makers are reported to be preparing to enter the MDF world.
According to industry sources they include Battistella Indústria e Comercio Ltda of Rio Negrinho, Santa Catarina state, along with three Paraná state firms: Guarapuava-based Repinho Reflorestadora de Madeiras e Compensados Ltda; Indústrias J Bettega SA of Bituruna and Miraluz Indústria e Comercio de Madeiras Ltda, based in Sengés.
Plywood companies’ evident enthusiasm for this change of product direction is now tempered by caution over investing at a time when even Brazil’s biggest MDF players are facing a fiercely competitive market and still have spare capacity.
“When you look at projects like this, you consider the market, and don’t really know how long it will take for the payback on your investment. That’s the major question causing many companies to hesitate at the moment,” explained Henrique Zanin, a Brazilian industry consultant whose firm, Organon Consultoria e Engenharia advises some plywood producers on the MDF switch and suitable technology.
He recalled how many plywood firms had reached “a cross-roads because their products were in decline, with costs soaring. They had to come up with an alternative [product] or their companies would just die,” stressed Mr Zanin, but added that they do come equipped with their own forest resources and experience of the wider wood products business.
Mr Zanin pointed to a gradual change of approach by several would-be converts. Some firms, deterred by the experiences of some pioneer counterparts who bought new Chinese MDF lines, are considering buying European technology. They are looking at acquiring upgraded secondhand German machinery in place of outdated Chinese multi-daylight press lines, he said when WBPI met him in São Paulo this June.
The Brazilian plywood makers are realising not only the complexity of learning to do business with China, but their dependence on a Chinese supplier for the plant’s adaptation for Brazil, its assembly and start-up. Chinese technology is still unfamiliar in a country dominated by European machinery and its more advanced, continuous-press lines.
The would-be MDF producers are discovering the relative benefits of greater efficiency and fibre and resin cost savings – particularly for thinner board – to be gained from a continuous line, against the less advanced batch lines offered by most Chinese manufacturers.
However, with Brazil’s industry dominated by ever-bigger panel groups and huge-volume MDF lines, the domestic market is developing additional niche business, conversely more suited to batch production. Today, with a number of smaller multi-opening press lines closing down across Europe, the Brazilian newcomers can acquire reconditioned older machinery ideal for niche volume business, according to Mr Zanin.
Organon consultants visit European countries to inspect machinery that may have run for as long as 20 years, and advise potential Brazilian buyers on further upgrades. They have also checked out Asian options, including China and Malaysia.
“Despite being secondhand, the European lines are more advanced and upgraded than the new Chinese equipment. What’s important is that Brazil has enough technical engineering skill to assemble and to upgrade such lines.
“But the Chinese [lines] are not discouraged here. They are still an option,” said Mr Zanin who believes that MDF makers with successful Chinese-equipped plants will probably continue to use such machinery.
After just seven months of operating, at the height of one of the worst international recessions ever, Guararapes’ MDF division, Guararapes Panéis, has a foothold in the market with its sanded and now melamine faced board. It recently installed a 72,000m3/year Brazilian low pressure laminate line supplied by the Curitiba-based firm Omeco Ltda which, in July, was running full-out, round the clock, reported general manager Mariano Dantur Do Canto.
“The short-cycle press for boards 2.75m long is running well. With this we have a good mix of products selling coated and raw boards,” he told WBPI. Guararapes’ sister convert, Sudati, has also been improving the quality of its pine-based MDF panels and its line efficiency. It installed a fibre mat water spray system for the line, which is capable of turning out board from eight to 22mm thickness. Guararapes was considering a similar installation, reported Mr Dantur Do Canto in August.
Some smaller panel makers, like the southern plywood newcomers, are said to be carving out niche markets as low-volume finished panel suppliers to smaller furniture companies in the big furniture manufacturing zones.
New MDF players, cutting their teeth on a new product – and investing during the worst economic crisis for decades – can certainly expect a rough ride in the market. Despite the prospect of a welcome rally in Brazil’s home market in the second half of 2009, these small players will be lucky to survive a battering as the leaders merge to form giant new groups.
But Brazilian plywood families come from tough and resourceful stock. They have proved determined and flexible in the face of change before, having successfully reinvented themselves from lumber to plywood producers. So, some of the newcomers could still survive.

Satipel launched its first fibreboard unit, a 350,000m3/year Siempelkamp ContiRoll line, at its expanding main panel complex in Uberaba, Minas Gerais state in July. Its first MDF board went on the market in September (2008).
That project has been achieved in parallel with another huge scheme in which the São Paulo-based firm is constructing a big 700,000m3/year continuous MDP line to replace its old batch line in Taquari, southern Brazil.
Phase one of this plan will see a new 30.7m-long Siempelkamp press going onstream in the middle of next year with an initial output of 460,000m3/year – more than twice that of Taquari’s 38-year-old 12-daylight press unit. A second phase, reaching the full 700,000m3/year capacity, is currently due for completion in 2011, according to the firm.
The timing of both projects has been prompted by Satipel’s reading of the Brazilian panel market and forecasts of continued growth, particularly for MDF consumption, in coming years.
The company’s two expansion schemes involve a combined investment of around US$250m and theirs is just one of a number of major expansion plans the Brazilian industry is currently undertaking.
Confidence remained high among producers earlier this year. They believed fervently that their markets would continue to demand more panel products, justifying these significant investments.
This confidence seems to be underpinned by the strength of the domestic panels market, which grew at a rate of around 10% in 2007 and is forecast to expand by a further 5-10% this year.
“Overall growth this year will be about 8%, which is still quite good,” said Satipel’s Roberto Sczachnowicz.
Producers justify the latest cycle of panel industry capacity plans based on Brazil’s longer-term sustainable development and, particularly, construction industry growth, according to Satipel’s commercial vice-president Mr Sczachnowicz.
“We all know Brazil has a real deficit of housing and living conditions. We have more than 100 million people who need to move to new and better housing. And one day, they will be furnishing those empty spaces that are now being built.
“So, that was the main driver for the expansion programme which is happening in the panel industry today,” he explained.
Even so, the executive admits to some concern about the medium-term market position, with a big jump in supply as new panel lines, including Duratex’s one for one million m3/year of MDP, due on-stream [maybe] in 2010, are launched.
Brazil’s panel producers are aware that they will likely have to start to export some of their increased output with up to two years of over-capacity at home. But export may prove more difficult in the face of currency exchange fluctuation, higher tariff barriers and a lingering global economic downturn.
Meanwhile, Satipel is confident its new lines, especially the MDF plant, will prove competitive in the marketplace. At Uberaba, the new 2.75m-wide MDF line will benefit from efficiency and lower costs, sharing an optimised existing infrastructure installed with Satipel’s existing 2,000m3/day Siempelkamp ContiRoll MDP line there.
At Taquari, Satipel still runs its 200,000m3/year Becker & Van Hülen multi-opening-press MDP line, along with two lamination units: a 1980 Siempelkamp melamine overlay line with 72,000m3/year capacity and a 216,000m3/year Wemhöner installed in 2006. It also runs a 1980s Babcock impregnation line.
Unusually, the southern Brazilian plant also operates its own furniture components unit with a variety of semi-finished cut-to-size MDP parts, employing edgebanding, profiling and post-forming techniques and sold on to furniture manufacturers.
Production of the well-invested 20-year-old line is limited, accounting for only around 5-10% of the plant’s board production this year. But it provides a valuable extra value-added business.
The Taquari mill occupies a spacious site surrounded by forest plantations and with a large 30,000m2 lake softening the hard industrial landscape, as well as providing a valuable water resource.
The new continuous MDP line is being integrated gradually alongside the old batch line. Some existing infrastructure, including the woodyard and some wood processing equipment, such as one Bison dryer and a ring flaker, are being retained.
Apart from the new press, Satipel will install a Büttner dryer with a 33-35 tonne water evaporation drying capacity.
Also, all downstream resources including finishing will be installed and ready for the line’s ultimate capacity, explained Satipel’s operations vice-president Mauro Pini França when WBPI visited the site in July 2008.
Next year, the Taquari plant will see its laminating paper impregnation section upgraded with a new Italian Tocchio line due to be installed in the second quarter. A similar line has been ordered and will be delivered to the Uberaba site at the same time.
Major ground works were still under way at Taquari in July, including the
construction of a new perimeter route allowing trucks serving the new plant to circulate smoothly.
Wood used at Taquari varies from virgin roundwood to chips, sawmill offcuts and a selection of industrial waste wood, some laminated.
Satipel recycles material from clients as well as from its own components line. Up to 50% of the plant’s total wood supply has been made up of recycled waste material, but that proportion should fall when panel making expands, according to Mr França.
Satipel intends to capitalise on its close proximity to the River Taquari, part of a network of rivers reaching across the state of Rio Grande do Sul.
The firm expects to establish a small river dock at the foot of a maintenance road for barges to unload wood chips from more distant forests. It will move the chips the few hundred metres up to the plant by conveyor.
“It will allow us to have extra wood from other regions of the state at a competitive price....chips brought by river could amount to 30% of the total wood used, where the river is much cheaper than trucking,” said Mr França, who has since left the company to take up another post.
Satipel’s latest investment in Taquari will mean that it can expect to remain Brazil’s leader in MDP production for some time to come.
From 2011, when the local line’s phase II is complete, the firm can boast a two-site capacity of 1.5 million m3/year. This takes account of its 100,000m3/year five-daylight press line at Uberaba.
It will also benefit from increased production there from its MDF line, which includes a 30m long, 2.75m wide, Siempelkamp ContiRoll press; CMC Texpan forming section; Andritz refiner; Büttner dryer; a glue kitchen from Imal; Siempelkamp SHS transport/storage system and a Steinemann eight-head sanding line.
In recent years, increasing industrial development by the panel industry in southern Brazil has been aimed at Brazil’s main Bento Gonçalves furniture making zone. Masisa do Brasil Ltda is set to launch its upgraded 750,000m3/year Dieffenbacher MDP line at Montenegro, Rio Grande do Sul (RS), early next year, while in the same state, Fibraplac Chapas de MDF Ltda could also launch a 500,000 m3/year MDP line at Glorinha, RS late in 2009 and two plywood makers were due to launch small Chinese MDF lines in Santa Catarina state by late 2008.
Meanwhile, new furniture manufacturing zones are developing in northern and central Brazil and the buying power of poorer Brazilians in the nation’s northeast and west is growing fast.
Satipel, which went public last year, is convinced it’s latest investments in Taquari, and 1,500km north in Uberaba, will allow it to take full advantage of future market growth in both southern and northern Brazil.

The move to MDF has emerged as producers in Brazil’s still large, but fragmented, plywood industry have seen their profits shrink over recent years, mainly thanks to a devalued US dollar. Meanwhile, they have watched the market for MDF and medium density particleboard (MDP) grow strongly.
Many smaller, family-run plywood firms, unprepared for the setback, keeled over and perished. Some initially switched to softwood plywood manufacture, later closing. But, others, eager to survive, saw evolution through upgrading to more sophisticated panels as the way forward.
The producers’ shift towards MDF was stimulated by the appearance of efficient, relatively low-cost Chinese-built MDF and MDP lines, as well as by fresh availability of credit in Brazil, according to Henrique Zanin of the Brazilian consultancy Organon Consultoria e Engenharia.
Among those plywood producers leading the switch are two companies, both based at Palmas in southern Paraná state, independent, but linked through family ties. They are Indústria de Compensados Guararapes Ltda and Indústria de Compensados Sudati Ltda.
Each firm opted to launch a 180,000m3/year multi-opening fibreboard line from the Chinese supplier Shanghai Wood Based Panel Machinery Co Ltd (SWPM) and both plants have been taking shape in Brazil’s Santa Catarina state: Guararapes in Caçador and Sudati in Otacilio Costa.
With Brazil’s panel industry still in the grip of a continuing raw material crisis and the forest resources of Paraná already exploited by the big panel makers, the newcomers chose to locate further south in still relatively timber-rich Santa Catarina.
In July this year (2008), WBPI took the opportunity, while in Brazil, to fly to the Santa Catarina town of Caçador to see progress being made by Guararapes on its MDF project first-hand.
The firm originally aimed to complete its new plant by mid-2008, but assembly only began on site in May and construction has been delayed by high winds and heavy rain in recent months. The revised plan now sees the plant start-up in December 08 or January 09, a little over a month after that of Sudati, Guararapes’ general manager Mariano Dantur Do Canto forecast in late October.
Guararapes’ Chinese machinery arrived at the Santa Catarina port of Itajaí aboard a single ship at the end of April. The equipment was ferried in 179 truck loads to the site in the state’s interior. Meanwhile, a team of Brazilian construction workers shifted some 350,000m3 of soil in the major task of levelling the hill-top industrial site.
By July, the company’s fibreboard offshoot, Guararapes Panéis Ltda already had its SWPM board line installed in a 14,000m2 production hall. Work was continuing apace outside to erect the Chinese-supplied wood processing equipment, including the 4m diameter drum debarker, 100 tonne per hour disc chipper, a biomass silo and a Brazilian-made chip silo.
Engineers from Austrian refiner supplier Andritz AG were due to finish assembling the new line’s refiner system – one of only two main sections not supplied by the Chinese – by September. In the meantime, Guararapes planned to complete erection of the energy plant.
Shanghai Wood Based Panel Machinery, part of the Kronospan Group, supplied Guararapes with a 400m3/day 12-daylight batch press MDF line with a nameplate annual capacity of around 144,000m3. But the panel maker has its sights set on bigger output.
“We know we can take [capacity] up to more than 500m3/day, gradually, depending on market demand, so we modified the [basic] Chinese line,” explained Guararapes Panéis’ general manager.
One section of the line to be modified is the chip silo. SWPM could only provide a small capacity unit of 1,000m3, equipped with hydraulic pushers to move the chips. Guararapes chose instead to buy a 6,000m3 silo with a screw system from a Brazilian supplier, said Mr Dantur Do Canto, former production manager at Porto Alegre-based Fibraplac Chapas de MDF Ltda.
The panel line, which includes a pre-press and Steinemann sanding section, will produce raw boards of 1.92x5.55m.
Last year, Mr Dantur Do Canto and Sudati’s general manager spent two weeks in China with SWPM, a trip which included a four-hour flight to western China to view two of the supplier’s lines in operation. They visited Jiangxi Green Continent Woodbased Panel Co Ltd in Jian city, Jiangxi province.
The Brazilians were impressed by what they saw – not least the finish of the sanded panels produced, in spite of the poor quality raw material being used there.
When WBPI visited the Guararapes site, Chinese personnel were still overseeing the unpacking and assembly of components from shipping crates. One engineer was responsible for outside equipment, while another dealt with the panel line itself and a chief engineer took overall charge.
The SWPM line will turn out 100% pine based MDF panels, initially with a sanded finish. Guararapes expects no shortage of wood from around Caçador, with chips acquired from numerous sawmills within a 40 km radius, while roundwood will be trucked in from up to 100km away.
Although Brazil’s panel sector is in the midst of a new wave of capacity expansion, Mr Dantur Do Canto is confident his firm, albeit a small MDF newcomer, will increase its share of the country’s sizeable furniture market.
Not only that, but the executive agrees with suggestions that local MDF manufacturers could exploit new markets beyond that of furniture. He admits small Brazilian MDF players like his could attract new niche business elsewhere.
“MDF in Brazil is barely exploited in segments such as packaging and civil construction,” Organon consultant Henrique Zanin told WBPI.
“In Brazil, when one talks about MDF, one immediately thinks about the furniture sector, which is more than consolidated and over-supplied. In Europe, MDF is very strong in construction, for example for door jambs, casings and doorskins,” he said, adding that such a trend should be followed in Brazil.
Organon Consultoria was alerted to the trend among Brazil’s plywood firms when in early 2007 it was asked by one company in Santa Catarina to coordinate a project to install a low pressure melamine lamination line. It turned out the firm planned to buy in MDF, from the new small MDF producers, which it would finish itself.
One potential supplier of the board was to be Maseal Industria de Compensados Ltda of Campo Grande, Mato Grosso do Sul state. Later, Organon, based in Campinas, São Paulo state, was asked to coordinate Maseal’s MDF project, which includes installing a Chinese SWPM fibreboard line, recalled Mr Zanin.
Maseal is understood to have put its scheme on hold pending success in its search for a suitable partner to join it in the investment project.
Mr Zanin believes that, despite the traditionally informal and rather dated management style of family-run plywood firms, these companies are flexible and prepared to change. One incentive to switch to MDF is that buying Chinese and integrating processes means a firm could establish an MDF/particleboard plant for one third the cost of a similar German plant, he observed.
Guararapes, with two well-invested
plywood plants in Paraná and Santa Catarina capable of making 540,000m3/year of board, aims to order a low pressure laminating line at its MDF plant, perhaps early in 2009 said its
general manager.
There is no doubt his firm is committed to MDF manufacture and, as with other plywood newcomers, will benefit from the experience brought to its new plant by Mr Dantur Do Canto and production head José Claudio Alves.

Brazil, Latin America’s biggest country, and its most prized marketplace, remains the jewel in the crown for the region’s expanding wood based panel makers.
That is one reason why the country has seen a flurry of capacity expansion announcements from its domestic producers, scrambling to take advantage of sustained annual market growth expected to average more than 10% in the next four years.
Nowhere is the urge to establish market dominance in Brazil more vital than at Latin America’s top panel manufacturer Masisa SA.
The Chilean group, already a local MDF producer, is racing to launch a 750,000m3/year medium density particleboard (MDP) plant in Brazil’s southernmost state of Rio Grande do Sul.
But Masisa’s Brazilian ambitions took a knock in July, when its bid to merge its local operations with those of Sonae Group offshoot Tafisa Brasil SA collapsed.
Masisa had acquired the 37% stake in Tafisa’s Piên MDF, MDP and laminated wood flooring plant from Tafisa’s ex-partner, Brascan Brasil. However, when merger talks broke down, Masisa sold out to Sonae, giving the Portuguese group 100% control of Tafisa Brasil.
Before the deal collapsed, Masisa revealed the main reason for the merger attempt was its need for greater local MDF and MDP production to offer its Brazilian customers, according to its corporate supply and development manager Eduardo Vial, who WBPI met in Chile.
Despite the setback, construction of Masisa’s southern MDP mill on a greenfield site in Montenegro, Rio Grande do Sul, has continued apace. The line is planned to start up in the first half of 2009.
Masisa has adopted a novel approach to the choice of its latest panel line. Instead of simply buying a brand new machinery package from one of the big European suppliers, the group is building a line based on a secondhand Dieffenbacher press acquired from a redundant strawboard plant formerly operating on the plains of Canada’s wheat belt.
The former 500,000m3/year Isobord Enterprises Inc strawboard line in Elie, Manitoba, launched in 1998, was acquired in 2001 by Dow BioProducts, part of Dow Chemical Canada, when Isobord went into receivership.
Dow, which supplied Isobord with polyurethane resin, ran the line until 2006. Attempts to find a buyer for the plant failed and finally, early this year, Dow sold the line machinery to Masisa.
Dieffenbacher overhauled and upgraded the 45x3m press in Canada and by July it was being shipped by rail to Houston, Texas for the final stage of its journey to Brazil. The converted line will include a new Dieffenbacher forming section and dryer, new glue kitchen and blending unit and an Imeas sander.
“In effect, it’s a completely new line with the upgrades,” explained Masisa’s corporate engineering manager Manfred Timmermann. The US$125m project will also include a 300,000m3/year Hymmen melamine line for finishing the board, he added.
The Montenegro plant will use a mix of plantation woods including pine, eucalyptus and short-fibre acacia, drawn mainly from local third party landowners. Masisa has also bought land and is planting around 4,000ha.
The plant benefits from a variety of communications options, including rail – to bring wood greater distances – as well as road and river.
“We need MDP to complement our product mix [in Brazil]. In a lot of [our] ‘Placacentro’ distribution centres, customers buy MDF from us and go to somebody else to buy MDP. We must complete our product range,” Eduardo Vial told WBPI.
Elsewhere in Brazil, Masisa is focusing all panel production on its core market of furniture and interior decorative uses. To that end, this year the group gave up its battle to create new markets for its single OSB plant in Ponta Grossa, Brazil and vowed to get out of the structural panel business.
It sold a 75% stake in its 350,000m3/year Dieffenbacher line to the region’s growing OSB manufacturer, Louisiana-Pacific Corporation of the US, which operates two smaller Chilean OSB plants through subsidiary LP Chile.
“Louisiana-Pacific is a very good partner for us. We don’t compete in any markets. They don’t make MDF or particleboard, and if we need the complement of structural board in some markets, they can provide this from Chile and Brazil now,” commented Eduardo Vial.
Although Brazil remains at the top of the group’s priority list for regional expansion, Masisa continues investing in other countries. Its strategy calls for a rolling programme under which it aims to install a new panel plant somewhere in Latin America every two to three years, it confirmed.
Chile is the hub of the Santiago-based group and, largely because of its small domestic market, is an exporting centre mainly serving Japan, China and South Korea, as well as parts of Latin America. Chile’s total MDF consumption remains modest, at just 110,000m3/year, while the national industry capacity is a huge 1.3 million m3/year.
MDF exports are set to rise with the 2007 start-up of a second continuous line, adding 350,000m3/year capacity to Masisa’s Cabrero site. As output from the Siempelkamp line grows, the group aims to target regional markets in Central America, the Caribbean and other parts of Latin America.
Cabrero’s line II, to run full out by the end of 2008, was originally conceived with a view to feeding the then-attractive US MDF mouldings market. But that has been squeezed following the sub-prime housing crisis. “We have forest and sawmills close by and when you put in a second line you reduce the fixed costs,” said Masisa’s manager of Chilean panel operations Luciano Tiburzi.
The line, utilising radiata pine, was designed to have a 2.75m wide press, with the Brazilian market in mind. Other countries in the region have a 2.45m width, Masisa explained.
Sections of the new line seem to dwarf Cabrero’s nearby 160,000m3/year line I, a Sunds Defibrator (Metso) unit with a Pendistor forming section and a 21x2.45m continuous Küsters press. Masisa lifted its output from a design capacity of 110,000m3/year.
Line II comprises Metso wood processing equipment including a debarker, chip classification and two 62in refiners, each with a 6.5MW motor. It also has a 64 MW dust-burning energy plant, a Kontra storage handling system and Anthon cut-to-size line.
Line II will focus on producing standard thickness board for furniture, while line I continues to make thin, ultra-light panels. As a proportion of overall Cabrero output, thin board represents 26%.
Masisa made further investment at its Chilean coastal Mapal plant. There, it spent US$15m on a new 150,000m3/year Wemhöner melamine laminating line and 30 million m2/year Vits impregnation unit, due to start up this September.
Regional markets all seem to be stable, with good growth potential. An example is Argentina, from where Masisa has exported 60,000m3/year of board into Brazil. But strong domestic demand, and the launch of Masisa’s Montenegro plant, mean board will be redirected to the home market. Masisa has a 180,000m3/year particleboard capacity and a 250,000m3/year MDF line in Concordia, Argentina.
Other South American countries with potential – and markets attractive to Masisa – include Peru, Colombia and those bordering the Pacific Ocean.
There is no doubt Masisa has been hit by the US housing slump and economic crisis, affecting sales of MDF mouldings and solid wood products, but, even in July, executives spoke of seeing the first signs of a price revival.
With 2007 capacity of 2.6 million m3/year at plants in Brazil, Argentina, Venezuela, Mexico and Chile, and ambitious growth plans, Masisa seems set to continue to dominate the Latin American panel scene.

Often considered dated and environmentally unfriendly, wet process hardboard barely features in today’s global portfolio of wood based panel producers.
Except, that is, among some large panel makers in South America and their many customers around the world. These companies argue that, with adequate environmental safeguards, their good quality, competitively-priced thin board will continue to feed a rich global niche market for some years to come.
Among the board’s staunchest defenders is Brazilian eucalypt particleboard and hardboard maker Eucatex SA of São Paulo. Despite being hit by the US downturn, its two big Washington Ironworks press lines are this year feeding new export demand from the likes of Russia and Ukraine.
But, like its fellow Brazilian hardboard maker Duratex SA, Eucatex is hedging its bets ready for the day when their traditional product finally fades into panel history.
Work is progressing on an US$81m Eucatex project to install a 250,000m3/year Dieffenbacher continuous press line to make high density fibreboard (HDF) at its Salto site. The new dry line can also produce thin MDF.
Located near Salto’s wet process lines, it is set to turn out board from May or June 2009, according to Eucatex’s youthful executive vice-president José Antonio Goulart de Carvalho.
Eucatex, which only recently emerged from Brazil’s equivalent of the US Chapter 11 bankruptcy protection, has long wished to broaden its portfolio to include MDF, but it is reluctant to join the Brazilian industry’s latest capacity stampede to add large volumes of standard thickness MDF.
Rather, the group saw its chance to focus on thin fibreboard. For Eucatex, this has immediate attractions, not least because it is a Brazilian market leader in doors, laminate flooring and wall partitions. Thin board is also essential in furniture such as drawer bottoms and wardrobe backs, it points out.
In addition, with uncertainty as to just how soon the rush of new MDF capacity will be absorbed in Brazil, thin board offers a better export prospect, Jose Antonio Goulart de Carvalho told WBPI in an interview in São Paulo.
“We saw this opportunity and planned a very effective, competitive project. I think ours will be one of the most competitive plants in Brazil for thin HDF,” said the Eucatex executive vice president.
Dominated by its 21m Dieffenbacher press, with a width of 2.75m, the new HDF line will include wood preparation and refining sections from Metso, glue kitchen and blending units from Pal and Imal and saws, transport and finishing operations supplied by the Italian
company EMG.
This addition to its broad product portfolio will help Eucatex regain market share, lost over the period of Chapter 11, and its capital restructuring; company progress was set back around two years due to its financial troubles, admitted José Antonio Goulart de Carvalho.
The HDF unit was not the only scheme the group was hatching up during its recovery process.
Eucatex is considering a bolder plan to build a 500,000m3/year eucalypt MDF plant, but raw material remains the biggest challenge. Wood and land prices are still soaring, especially in Eucatex’s home state, as potential tree plantation land is being snapped up for biofuel crops.
The firm has looked at possible sites in southern Brazil, but may still locate a new line at its Botucatu site in western São Paulo state.
Further west still, it has identified promising potential wood sources in the verdant state of Mato Grosso do Sul – translated, its name means ‘Thick Southern Forest’. That resource could sustain a plant in the state.
However, the executive vice president stressed, it is too early to reveal formal plans. Eucatex has studied the domestic market prospects and believes it could grow at up to 10-15% a year to 2012, absorbing all the new capacity now going in. But there is still some uncertainty on the demand side.
“We are focusing on finishing the HDF line and putting it to work. When we start to see the end of that project, we will
have a chance to see how the market is reacting.”
Any greenfield project, along with its supporting forest, means big investment – up to US$250m, he suggested.
One further project, born from the group’s review during its recovery period, is set to reinforce the efficiency of its new Salto HDF line. At a time of spiralling raw material costs, Eucatex has gone into waste wood recycling in a big way.
Taking advantage of Salto being close to Brazil’s commercial hub of São Paulo, and the city of Campinas, it boosted the capacity of a small recycling plant. Today, it is able to turn out up to 20,000 tonnes of material a month, both to fuel energy output and for use in panel production.
With an investment of around US$15m, Eucatex is already making big cost savings running its hardboard lines. Eighty per cent of the 10,000 tonnes of current monthly waste wood output is helping to fuel its energy needs, with the residue going into panel production.
The firm gathers high grade waste in 320 skips of 15-tonnes each from a range of urban sites such as vehicle assembly plants, big stores and ports within a radius of 150km around Salto.
Eucatex strictly monitors waste quality, and depending on this and the distance wood has to be trucked to the plant, pays varying sums for material under long-term contracts with suppliers.
Its motives for recycling were the soaring cost of wood and its limited plantation resource – reduced further when it paid off part of its bank debts with forest land. Now, it is the national industry’s biggest wood recycler.
With growing demand from the new HDF line, Eucatex will utilise much of its remaining recycling capacity. At full capacity, it expects to raise the volume of waste used in panel production up to 30% of the (recycling) unit’s output, according to José Antonio Goulart de Carvalho.
“When we achieve the capacity we’re planning, we will be saving more or less 12,000ha of forest plantation [by recycling],” he predicted.
In July, when WBPI paid a ‘whistle-stop’ helicopter visit to Eucatex sites, major works were underway at Salto. Apart from the progressing HDF line, a huge new area was being carved out to allow significant expansion of the woodyard.
Salto is at the heart of what makes Eucatex distinctive – its focus on the design and development of a wide range of value-added finished products. With an eagle eye on niche market openings, it offers an array of printed, painted and laminated panel finishes. “The finished product is our strength,” declared the executive vice president.
At the Botucatu site too, we found an air of change and refurbishment at Eucatex’s 360,000m3/year medium density particleboard (MDP) plant. The firm is working on its highly productive Bison Hydro-Dyn board line, investing in panel forming and finishing. “We aim to upgrade and improve the efficiency of the line and board finish,” explained Eucatex’s consultant Paulo Amanthea.
Last November, it invested around US$9.3m to install a new nine million m2/year Wemhöner melamine laminating line alongside its Barberàn finish foil line. In December (08), Botucatu will get a new US$6m Tocchio impregnation line and an old Dieffenbacher melamine line will be upgraded and switched to Salto.
Despite all the new spending, Eucatex is still committed to hardboard. It has invested heavily in water treatment at Salto and considers its plant environmentally friendly.
Its executive vice president accepts that one day wet process hardboard will die out. But, so long as global demand continues and there is still life in its quality, low-cost product, Eucatex will keep the lines running.

At a time when Brazilian particleboard makers have been reluctant to boost production capacity in an uncertain market, leading panel producer Satipel Industrial SA has quietly continued expanding.
Successfully raising the output of its 1,000m3/day Siempelkamp ContiRoll line in Uberaba by 30% through de-bottlenecking in 2003, Satipel is preparing now to extend the main press to take annual capacity from 430,000m3/year to nearly 700,000m3.
Meanwhile, the company is reinforcing its presence in Brazil’s all-important southern marketplace where, in Taquari, Rio Grande do Sul state, it runs a 35-year-old 200,000m3/year batch press line.
In a battle to compete with Brazil’s more modern continuous press lines, Satipel is spending around US$2m to boost panel quality and lower manufacturing costs. Just as wood prices are soaring, it has modified the line to accept sawmill residues, and is upgrading dry fibre screening and panel sanding to improve product finish.
Beyond this, Satipel is also making a preliminary study of “the logical next step” for Taquari – the introduction of continuous press technology. The firm is considering a low-cost, two-phase option which would eventually lift capacity to 350,000m3/year, revealed operations vice president Mauro Pini França.
With board demand set to rise further in the south, such a move may be feasible in less than three years’ time, he said. “We are following carefully forecasts and trends in the market, and when it seems a good time to go further on the process, we will do it,” Mr França said guardedly.
Back in Uberaba, when Satipel launched its first continuous line in 2000, underpinned by a big wood resource of more than 40,000ha of planted pine forest, a press extension to 1,500m3/day was already planned. But much of the line, apart from woodyard units, needs upgrading to accommodate the extra output.
Following strong growth in the particleboard market last year, with sales rising 14%, Satipel plans to extend the ContiRoll press from 25.5m to 38.7m in 2006. The plant has six weeks downtime programmed for next January and February, traditionally the quietest period of the market year.
Major modifications needed to support the extra capacity include installation of a second dryer; the upgrade of the energy plant to feed the dryer with hot gas and some strengthening of the fibre preparation area. That means the addition of a fifth ring flaker, a fourth screen, and a fourth mill to refine material for the board’s surface layer.
In the line’s resin preparation area, the company needs to make changes too. It is due to switch the core layer blender to the surface layer position and replace it with a new, larger blender for the core layer.
Downstream also, Satipel has to make changes, adding another pair of sanding heads to its six-head sanding line to increase the speed and process the extra board volume, according to the vice president, interviewed at Satipel’s Uberaba facility in May.
Investment appears relatively modest for the line expansion at a likely US$15m. “Considering the extra capacity you get – roughly 200,000m3/year – it is not a high investment overall,” he observed, admitting the initial line investment was obviously a bit higher but “is now paying off”.
Satipel originally launched its continuous particleboard line in 2000 as part of a major expansion project in western Minas Gerais state. Previously, the firm produced  particleboard in Uberaba on two old batch lines, one a single-opening press unit and the other a five-daylight press line, with a combined 160,000m3/year capacity.
In readiness for the ContiRoll press extension, as well as to help build up its market share, Satipel has brought its old 300m3/day multi-opening press back into service. The Siempelkamp-built press was mothballed three years ago as the continuous line got started, but was reconditioned and began running again this April.
With its electrical and electronic systems earlier modernised, the old line is set to move centre-stage once again as it takes the strain through the downtime period. The plant also plans to build up panel inventory to sustain its customers at that time.
In 2003, Satipel led the field among Brazil’s particleboard producers with a 23% share of national production capacity.With no major new capacity projects planned for particleboard since then, it has maintained its leadership. No new capacity is likely in the next two years, said Mr França.
The firm is predicting new market growth during 2005 of between 10%-12% for its panel in Brazil. It believes it is well placed to feed further particleboard demand, if necessary, by still running its old machine alongside the expanded ContiRoll line.
One project by panel newcomer Fibraplac SA of Porto Alegre to build a 330,000m3/ year particleboard line alongside its MDF plant in southern Brazil was recently dropped in favour of a second line for MDF.
But, producing particleboard in Brazil has not all been plain sailing. Panel makers are having to come to terms with a down side to the new boom in Brazil’s furniture industry. In recent years, economic growth in Brazil has tempted many more people from the country’s poorer ‘C’ class to enter the furniture market for the first time.
While their arrival has certainly stimulated new growth in the sector, it has also fuelled a drive by furniture manufacturers to make even cheaper products to fit limited consumer budgets. This, in turn has hit the laminated panel market with furniture makers opting to run board printing/painting lines themselves instead of buying melamine or finish foil faced board. Panel makers’ margins have been slashed as sales of their value added products have plummeted.
“It’s not only our concern, but also that of our competitors because probably more than 50% of Brazil’s furniture companies today use raw boards to paint themselves,” said Mr França. Satipel is running at barely 70% of capacity in both melamine and finish foil laminated board, he admitted. Melamine board sales in Brazil overall were  down by almost 13% in 2004.
But he forecast the practice among furniture firms will eventually backfire. Difficulties in colour matching components and frustration over poor productivity when pieces have to be returned for repainting should bring them back into the laminate fold, predicted the vice president. Meanwhile, “we have to dance according to the music” and deliver just raw board, he added.
Satipel’s decision to invest US$220m in the north central state of Minas Gerais came primarily from the huge wood potential of more than 50,000ha of concentrated forest land it bought in 1998 near Uberaba.
At a time of escalating wood prices, Satipel’s Uberaba mill is in the enviable position of complete self sufficiency in raw material. From this, the firm estimates it saves up to 30% on its production costs today, according to Mr França. Two-thirds of the one million m3 of solid wood it harvests annually goes to the plant, with the rest sold either to sawmills, energy use or chipping.
With an eye on costs, the panel maker is rapidly switching from tropical pine to highyield eucalyptus plantation. In the larger of two properties it is harvesting mature trees from a 38,500ha pine forest and has already planted 8,000ha of eucalyptus there.
From 2007, the proportion of eucalypt used in the Uberaba board will begin to rise and, by 2011 or 2012, it expects to be 100% eucalypt based, predicted Mr França. In the constant fight to be the lowest-cost panel producer, an estimated jump in wood yield of around 40% must be worth achieving.

Despite economic uncertainties in Brazil, a row with its local business partner and a lack of its own forest reserves in the country, Sonae Group’s long term commitment to its  Tafisa Brasil panel subsidiary is said to be “not in doubt”.
For some time, rumours have been rife within the Brazilian panel industry and beyond that Sonae, in spite of sinking US$270m into the firm, was ready to sell Tafisa Brasil.
At one point late last year, the firm was quoted in a leading Brazilian newspaper as stating that there was no ‘For Sale’ sign on the Curitiba-based MDF, particleboard and flooring producer.
Now, Tafisa Brasil’s chairman and chief executive José Baeta Tomás has firmly scotched the rumours. “Sonae’s position in Brazil is not in doubt with any of its businesses,” he emphasised.
Sonae’s panel joint venture with Canadian group Brascan Corp is finally delivering good returns as it consolidates its position in a crowded panel market, he insisted.
“We are in a good phase in terms of increasing our profitability and that has been done within not such easy market conditions, because there is over capacity [in Brazil],” Mr Tomás told WBPI’s Richard Higgs in an exclusive May interview at the Tafisa Brasil panel complex in Piên, Paraná state.
The emphasis on improved margins is in line with the strategy of the firm’s ultimate Portuguese parent group, Sonae SGPS SA, which demanded a financial payback  following years of heavy capital investment, particularly in its industrial operations worldwide.
Brazil, where it also owns significant retail property development interests, is the country which has received Sonae’s greatest investments outside Europe, said the executive. Back in 2002, parent group president Belmiro de Azevedo stressed Sonae was calling a halt to a string of major project investments still planned at Tafisa Brasil. It was time to cut costs, improve profitability and focus on selling added value products, he told WBPI on a visit to Brazil that year.
Among ambitious spending schemes to bite the dust at Piên since then were plans for a 50 million m2/year panel painting and lacquering line; a new mouldings plant and a 150,000m3/year sawmill, capable of supplying more than 40% of the panel plant’s raw material needs.
“We decided as a group, not only the industrial side, to consolidate our investments in this country in order to define later on, a new wave of growth, if that is feasible in terms of the economy,” said Mr Tomás, a Portuguese who took charge of Tafisa Brasil a year and a half ago.
Since 2002, the Brazilian panels operation has seen a significant shake-up in both its senior management and workforce. Management changes saw the departure of industrial project manager Jose João Lobo and chief executive Edson Ungarelli, the arrival of a new operating team and a reduction in labour of some 200, the firm said.
There is still much to do in terms of consolidating Sonae’s Brazilian manufacturing investment and this phase of development is likely to continue for Tafisa Brasil for up to three more years, according to Mr Tomás.
The company’s 56ha site features a 252,000m3/year Siempelkamp ContiRoll  particleboard line; two ContiRoll MDF lines, with combined capacity of 384,000m3/year; three overlay press lines for melamine and finish foil; a six million m2/year robotequipped laminate flooring unit; a highspeed, low-cost sanding centre and comprehensive automated Giben cutting centre.
There is no doubt that back in 1997 when Sonae Tafisa first launched its Brazilian wood panel operation, it had its eyes fixed firmly on the country’s huge potential market. However, what is now clear is that Tafisa Brasil’s joint shareholders have found the going in Brazil, with its economic ups and downs and Third World lack of infrastructure, a lot tougher than expected.
“Both shareholders hoped that the return [from the project] would have been quicker than it has been,” admitted Mr Tomás. He blamed difficult economic conditions in Brazil over the last few years for poorer results than Sonae group, in particular, had expected.
The Tafisa Brasil project, with Sonae Tafisa now holding a 63% stake and Brascan 37%, originally saw the Tafisa panel complex being fed primarily by pine plantations, in Paraná and Santa Catarina states, owned by Brascan Brasil SA.
As the complex’s panel capacity expanded – today, it consumes almost 3,000 tons of wood per day – it has relied more and more on buying sufficient raw material on the open market. Today, only around 10% of its needs come from Brascan’s forests, according to Mr Tomás.
It is public knowledge that relations between the companies’ shareholders have not been good. There has been disagreement over a number of issues, including the supply and pricing of wood and how management of the Tafisa Brasil mill operation should be shared, admitted Mr Tomás, although he was reluctant to go into details of the dispute.
“The difficulties between the partners were never completely connected with the wood supply....because the wood reserves Brascan had were and are not enough to supply us.
“I think the discussions are in terms of how the share of management of the [joint] company should be, even though that is regulated by the shareholder agreement, and that led to difficulties,” he suggested. He admitted that the running dispute created “not a very good image in terms of the reliability of the company”.
Mr Tomás conceded that comment about Tafisa Brasil has centred on two issues – its lack of forest plantations and the shareholder problems. But, the chairman stressed, the row “did not prevent us from operating in the market. I never experienced difficulties with clients for that reason...in the end, [selling] is down to your quality and price,” he declared.
In any event, he added, partner relations are “beginning to improve, and I hope that will happen”. He expressed confidence a solution to the problem would be found “in time”.
In an environment where cost cutting has become an imperative, Tafisa Brasil is only too well aware of its weakness in the forestry area.
In common with the rest of Brazil’s wood panels industry, Tafisa Brasil is facing the effects of a national wood shortage. This stems from a period of five to eight years in the 1970s and early 80s when government forestry incentives ceased and thus little tree plantation took place nationally. Planting recovered, without big state incentives, when wood industry growth boosted demand again, confirmed Tafisa.
Since then, however, for those who rely on wood as their base raw material, prices have generally soared in the market. This has come as a blow to Brazil’s panel makers, struggling to lower production costs in their own highly competitive marketplace. Producers like Tafisa Brasil, without forest reserves, are particularly vulnerable in the open market and are having to optimise still further their use of raw material.
Already, the Piên mill has increased substantially the level of waste fibre it uses in its  particleboard up to as much as 60% – more than other producers, it claims. It has intensified its search for better quality waste material and improved sources of supply, according to Piên industrial director Mário Gavinho.
In addition, Tafisa Brasil has increased the amount of eucalyptus wood fibre it adds to its panels with a maximum today of between 10%-15% of the total fibre mix, explained Mr Gavinho, former project manager at the Placas do Paraná MDF scheme, who started at Piên in 2003.
But, he warned, even more optimization will be required with the prospect that wood prices will go still higher as big wood suppliers trade heavily on the current scarcity.
Earlier this year the panel maker was able to stock up its 85,000 ton woodyard to benefit from a short-term rise in lower priced material. This was available as small wood processors, hit by the dollar/real exchange rates, bought in less.
When WBPI visited Piên in May, two giant columns of trucks, bulging with pine logs, lined the highway outside the complex in both directions, waiting to drop their loads. This was prior to a public holiday, according to the firm.
The company, after expanding its limited portfolio of added value products in the market, is putting great emphasis on trying to boost sales of these lines, including laminate flooring. “We have a very small share, even nowadays, in that area [added value], so we think we can improve it,” said Mr Tomás. Last year, the firm turned out 4.4 million m2 of melamine-faced board and 1.7 million m2 of finish foil covered panels, it said.
In the panel business, Tafisa Brasil has seen its share of the market reduced more recently. This is a result of major newcapacity projects, especially MDF, coming on-stream within the last two years, said the chairman.
“We are maintaining our volumes, but basically, in terms of share, ours is lower than it was at the beginning obviously, because there were less players then,”Mr Tomás told WBPI. In 2003, figures issued by the Brazilian wood panel producers organization ABIPA showed that Tafisa Brasil contributed just 8% of the country’s particleboard capacity, but around 28% in MDF.
The Brazilian panel market generally is currently growing at an average rate of 12% to 15%, although recent years have witnessed clear differences in trend between MDF and particleboard.
In 2003 MDF consumption grew faster while particleboard remained almost static, whereas last year the trend reversed, with particleboard sales up strongly and MDF down, said Mr Tomás.
Tafisa Brasil’s chairman put the sudden 2004 upswing of particleboard down to the gradual entry of poorer Brazilians into the panel furniture market. Because of their low income, only the less expensive particleboard goods were within their range.
Looking ahead, he suggested that, with the national economy unlikely to repeat last year’s high rate of growth, the panel market is set to remain stable over the next few years. “I don’t expect spectacular growth,” he said. The consolidation phase at Tafisa Brasil has been characterised by a programme of improvement in operating the existing plant facilities. “We need to continue to work here with what we already have,” stressed Mr Gavinho.
In its quest for greater productivity, the Piên plant is continuing to carry out a degree of fine tuning on its processes and equipment. This involves a number of lowcost projects to raise efficiency and increase the value of Tafisa Brasil products.
“We are working on [improving] a lot on things like press time and availability of the lines,” explained the industrial director.
One urgent project is the addition of a secondhand 75 tonne/hour wood chipper, being brought from a Tafisa plant in Spain. With its existing 100 tonne/hour unit needing major maintenance, daily stoppages have been costly.
These have forced the firm to buy in 300-400 tonnes of chips per day, the equivalent of up to 15% of its daily needs, according to plant engineering coordinator André Luis Silva. “The chipper is not working properly and we are not getting 100 tonnes of chips per hour. It has to stop three to four hours per day for maintenance,” he explained.
Another area where operational problems have had to be addressed, he said, is in the particleboard line chip preparation. Again maintenance downtime was high and the plant has just completed a project to change the layout, parts of the piping and electrical systems to resolve the difficulties.
In addition, with exports rising, the plant plans to install a fourth panel packing line just for those shipments destined for foreign customers. Making use of existing equipment on site, the firm wants to pack export products more securely to deal with cases of damage sustained in transit.
In terms of line productivity, Tafisa Brasil managers have set themselves an overall target of reaching output of 55,000m3/month on all three panel lines by the end of 2005. In May, production was running at between 46,000-47,000m3/ month, confirmed Mr Silva.
Beyond Brazil, things are also looking up for the group’s industrial division, Sonae Industria, which over the past two years has seen “a big turnaround”. It had taken time to digest its major European acquisition of Glunz, which is now helping make the division “a large contributor” to improved group results, Jose Tomás pointed out.
With a fresh plant team and management already tackling some formidable challenges, and Sonae’s backing assured, it remains to be seen if Tafisa Brasil can deliver the goods in the tough Brazilian panel market.

For many reasons, among them economic, cultural, and climatic, Brazil is an extremely unlikely market in which to find laminate flooring catching on.
Indeed, even the manufacturers of such flooring admit they face an uphill struggle in trying to get more than a fraction of the population in this vast South American nation to abandon traditional floor surfaces for their product.
Today, the Brazilian laminate flooring industry association, ABIPLAR, acknowledges that an overwhelming 90% of all flooring consists of ceramic tiles. Laminate flooring accounts for just 1.7% of the market with solid wood, carpeting and vinyl making up the rest.
It is rather surprising, therefore, to find some of Brazil’s largest and most experienced wood based panel manufacturers heavily committed to the production of laminate flooring. Not only that, but their number has grown with the addition of at least one optimistic convert to the sector.
With annual production remaining almost static at around six million m2/year over the last three years, it is clear that major panel players such as Duratex SA, Eucatex SA and Tafisa Brasil SA are in this business for the long haul.
They were joined by sector newcomer Fibraplac Chapas de MDF Ltda of Porto Alegre which launched its first panel plant in 2003 with a 180,000m3/year MDF line. Late last year, it started up a 1.5 million m2/year Homag laminate flooring line, although this is not yet operating commercially.
Flooring manufacture in Brazil goes back to 1998 when the two São Paulo-based panel makers, Duratex and Eucatex, launched their respective lines a few months apart. “At the beginning, we had very fast growth which continued from 1999 through to 2002. But in the last three years, the market has stayed at almost exactly the same level,” reported current ABIPLAR president and Eucatex’s civil construction division commercial director, Claudio Ferreira de Oliveira.
There is little doubt that the laminate flooring players have been somewhat disappointed with the pace of progress in the domestic market, following their heavy investments. “Six or seven years ago we thought laminate flooring could grow a lot but things are not as easy as we thought at that time,” admitted Mr de Oliveira.
So, what are laminate flooring’s advocates up against in Brazil? While the national economy is improving the lot of poorer Brazilians, this product is aimed at the top end of the flooring market. Those normally able to afford such a sophisticated product are, by contrast, currently facing serious economic difficulties, explained Mr de Oliveira, interviewed by WBPI in São Paulo in May.
In price terms, traditional flooring has a huge advantage with a good tile product costing around 20 reais (US$8) per m2, installation included, whereas laminate flooring sells for more like 50 reais per m2 including installation, according to the ABIPLAR president.
Costs are high for the manufacturer, even after he has made the huge initial investment to set up his particleboard or MDF substrate line. The flooring standard in Brazil is very similar to that in Europe and the producer has to pay international prices for raw materials like overlay and papers, Mr de Oliveira pointed out.
On top of that, the manufacturers have to invest huge sums promoting what is still a relatively new product in the country. “To develop the market, you have to invest a lot in marketing, so our marketing costs are much higher than in Europe.
“It’s a matter of culture and convenience in Brazil and you have to invest a lot to change this culture. It is one big obstacle to introducing laminate flooring,” the ABIPLAR president explained.
That culture is rooted in logic. As the climate in most of Brazil is hot and often humid, people prefer the cool of a tiled floor, particularly in the office environment, and in humid coastal and interior regions.
Despite producers’ recognition that they have a mountain to climb in getting over their message, they remain quietly confident of an eventual breakthrough. “Now the market is staying at the same level, but I think it will grow, not in a short period but in the long term. It is a good area to be in still,” declared Mr de Oliveira.
Unlike Europe, Brazil does not have the benefit of a developed DIY market through which the wood flooring can be channelled. In a country where labour is cheap, customers rely on installers to fit their floors.
To counter early problems experienced in the quality of installation ABIPLAR, along with the producer companies, is backing a continuing training programme for would be installers. To date, the association has trained more than 2,200 laminate floo ring installers all over Brazil, said the president.
Flooring manufacturers have been investing in a range of new products and different designs for the domestic market. In its quest to reinforce its presence at the high end of the market, Duratex last year planned to introduce new products, including an embossed-in-register pattern.
Early in 2004, Tafisa Brasil of Curitiba caused somewhat of a stir in the industry when it launched a ‘click-in’ glueless laminate flooring product, apparently contrary to an understanding with other producers.
This type of flooring, used widely in North America, was felt to be less suitable in Brazil because the glued version offers more resistance to moisture. “People use a lot of water to clean floors in Brazil (normally tiled), so they think in general that this is suitable for cleaning laminate flooring,” admitted Mr de Oliveira. The glue fills joints giving greater moisture protection.
Tafisa Brasil’s unilateral move sparked retaliation from Duratex which launched its own high-end ‘click-in’ flooring product at Brazil’s civil construction fair in April last year. Even so, it is understood this has not yet been available generally in the market.
In general the Brazilian laminate flooring industry has been following the trends in Europe in both technology and pattern design. The natural wood look, popular in Europe, “goes down very well in Brazil as well,” said Mr de Oliveira.
In recent years, there has been some growth of laminate flooring exports from Brazil, mainly in South America. Producers are looking at new opportunities in Chile, and in Argentina which has experienced an economic upturn more recently. Some companies are also seeing possible sales in the US but the high cost of using Brazilian ports and the issues of shipping have inhibited progress, said the ABIPLAR president.
Today, the Brazilian wood flooring industry exports in the region of 250,000m2 of its products annually.
There has been little change in domestic market share among ABIPLAR member companies, with Duratex still maintaining the lead with 44% followed by Eucatex with 32% and Tafisa Brasil at 24%. Three years ago, Duratex had around 50% of the market but Eucatex has taken some share from the other two producers more recently, according to ABIPLAR.
Flooring producers are looking again at the marketing efforts they have employed to penetrate this difficult market. As a panel maker, a producer has been used to selling to the industrial customer such as the furniture manufacturer. “Unlike panels, flooring is a retail business ... so the marketing effort we are all introducing, at least in our company, is not well focused.
“We are learning now to interact with our clients in the market to develop and sell a [flooring] product to the final consumer,” admitted Tafisa Brasil chairman and chief executive José Baeta Tomás. His company aims to introduce more value added products generally and recognises laminate flooring is important to profitability.
In southern Brazil, where the climate is more temperate, Fibraplac is still developing its MDF-based flooring products, some of which are being utilised by sister companies in the parent Isdra group. It develops shopping centres and runs hotels in Brazil.
Having considered moving into particleboard, the company is now preparing to launch a second MDF line at its site in Glorinha, Rio Grande do Sul state. Progress in flooring has been hampered by a lack of sufficient substrate available, according to Fibraplac’s plant manager, Mariano Dantur do Canto.
In the quest for greater flooring market penetration some producers, including Fibraplac, are looking at developing lowercost painted panel floors. As a newcomer to the panel industry, Fibraplac does not feel bound by the traditional products and practices of the sector at large.