Duratex is the Southern hemisphere’s largest producer of wood based panels. Based in Sao Paulo, it has about 200,000ha of FSC-certified planted forest. Gustavo Cruvinel Borges is business intelligence and export manager at Duratex. If anyone can predict the future of the Latin American market, he would seem to be the man.

We asked him first if the downturn in Brazil had affected the mix of panel products that Duratex is involved in. The answer turned out to be "Yes". "MDF and particleboard are our main focus," said Borges. "The total annual panel market in Brazil is a bit bigger than 6 million m3. The MDF market contributes about 60% of the total.

"In the last years, Duratex has invested more into the MDF side of the business than in particleboard, because the MDF market seems stronger and stable; but the political and economic crisis in Brazil has affected drastically the furniture market, and both markets have shrunk. The Brazilian domestic market for panels is falling 5%, year to date."

Duratex has not previously been shy about large investments in new production lines; but the shrinkage has led it to be one of the companies whose investment plans have been put on hold. "We do have plans to keep growing with new production lines, but all projects under study right now were postponed due to the political and economic crisis Brazil is passing through."

Elsewhere in this Focus we have mentioned exports as a way forward for Latin American producers. Duratex can provide an example: "Our production is focused mainly into the domestic market, which represents around 80% of total production. Recently we have increased our export participation from 5% to 20%, and we have plans to keep exporting about 20 to 30%."

It is not just insurance for lean times: "This can contribute to positioning Duratex not just as a local player, but as global player," said Mr Borges. Is the expansion of cities and the housing deficit relevant to Duratex’s future plans? Up to a point, he says: "To construct our sales forecasts and plan new expansions, normally we observe the political conditions of the country, country GPD, interest rates, and of course the civil construction scenario." And, just as Latin America is large and heterogeneous, so is Brazil: "Of course, we also analyse regional clusters and cities. Brazil is a huge country with several different economies inside the big one."

And the big economy of Brazil, he says, is at last on the up – as is the economy of the continent as a whole. "Talking about Brazil, we see that we are about to leave a long period of political and economic crisis. Despite some local crises in countries like Venezuela and Equador, Latin America keeps growing. We see opportunities in Colombia, where we recently acquired a local panel producer (Tablemac), and also we see with optimism other stable countries like Peru and Mexico. There are also good opportunities in the US and Canada."

Prices, naturally, have been affected. "The crisis has affected production utilisation," said Borges, "and right now there is some surplus capacity in Brazil. Of course, it caused a price decrease over the last few years. On the other hand, results for the panel industry in general are very low, and we can see some price movement in the last months in order to restore the profitability of the business itself and to rescue some companies drastically affected."

The US election campaigns are in full swing; and there has been loud talk of protectionism and trade tariffs from one of the candidates. Is this a worry? Not according to Borges: "We see the US very connected with Brazil; and for wood panels we have had a good trade agreement for a while. Also the US is a net importer of panels, because they did not invest in capacity over the last decades. We believe the election result, whatever it may be, will not affect the regular business between Brazil and the US."

The main concerns, and the main optimisms, for his company lie closer to home. "Those are related to economic conditions in Brazil. Duratex will always attend to its customers and will start to invest again when growth comes back."

And finally – did the Rio Olympics help? "Certainly! The Olympic Games can be considered as a good factor. Brazil has proved to the entire world that it is able to host and execute such an important event, with mastery, security and within the budget. It was an amazing spectacle; it has increased the self-esteem of local people." Brazil, it seems, is on the up.