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.