EPF highlights growing OSB and softboard sectors

Journalists, including WBPI, turned out in force to attend a European Panel Federation (EPF) press conference held virtually on June 15 following the organisation’s AGM.

Performance of wood-based panels markets were discussed, as outlined in the EPF’s new Annual Report 2020-2021, along with additional presentations focusing on the market situation for resins, EPF advocacy work and a view from the North American panels market.

First up was EPF managing director Clive Pinnington who summarised the performance of wood-based panels markets in Europe.

The top line figure shared was a 2.1% decline in production in EPF countries during 2020, noticeably smaller than the 6.1% reverse in European GDP during the same period.

Mr Pinnington explained that this smaller drop was due to continued strong demand for wood-based panels, especially in furniture and construction markets.

The sum total for wood-based panel producers in Europe was 58 million m3 for all panel types.

“Last year was a difficult year but we do feel that -2.1% was a lot better than expected and reflects a very strong restart [after initial pandemic impacts] in the second half of the year, a recovery driven primarily by construction and furniture,” said Mr Pinnington.

“Construction was classed as an essential industry and furniture had a boost by the changing lifestyle [with people having to remain at home].”

Mr Pinnington said the figures pointed towards a clear sign of increasing sales of wood-based panels into the construction segment driven by increased interest in climate friendly products and building products.

“That is a trend which will continue and indeed we want to see as we wanted some challenge to the dominance of the furniture segment.”

Some 47% of panels went into the furniture sector and 38% went into construction, the latter figure up by 8% compared to five years ago.

PANEL PRODUCTION BY TYPE

The largest individual panel product sector – particleboard (PB) – saw a 4.4% fall in 2020 production to 30 million m3, significantly below the highs achieved 12-plus years ago.

The top three largest producers were German, Poland and France, with a 1% increase for Poland. Volumes of PB going into construction were 29% of all PB production (up from 26% a year ago).

Recovered wood is used in 44% of European particleboard production (up 1% from the previous year), with Italy’s PB industry being the biggest user of recovered wood, with up to 95% of its PB being made from the material.

“This is a fantastic story, which we make great use of when talking to politicians in Europe, showing how secondary raw materials can make products now used in the home,” added Mr Pinnington.

“Less than a quarter is coming from roundwood, so that’s a positive development and one which we can expect to see continued in future years.”

The MDF industry recorded a 1.8% production decline. Mr Pinnington said the pandemic trend of people staying at home and equipping their home offices was beneficial to MDF sales and a trend the EPF expects to see more of in the future.

Germany, Poland and Spain are the largest European producers of MDF.

MDF end-uses feature a large jump for furniture – up to 54%.

OSB production was up 4.2%, with a very strong performance in the second half of 2020 that has continued into 2021.

“When it comes to OSB, which is very much one of the growth areas in wood-based panels in Europe, Romania is a powerhouse.”

Germany and Poland remain the other two dominant players in European OSB production.

Hardboard continues to be a tough sector to operate in and production fell for a second straight year, last year seeing a 1.4% fall. Russia is included in the figures for this segment because it is such as dominant player.

Packaging is the single largest sector using hardboard. “We hope 2021 can see a rebound for this sector,” said Mr Pinnington.

Softboard was the strongest performer in the EPF family last year, with production up 5.7%. “Its really very strong growth, accelerating in the second half, definitely related to some changing trends we are seeing in Europe driven by the new European Bauhaus, and to slightly changing the way we are living and drawing on nature-based solutions. Softboard is right at the heart of this. We expect to see another steep acceleration in 2021.”

Poland produces half the rigid and one third of the flexible insulation in Europe. Over 60% of products are used as insulation to improve energy efficiency of private homes and offices.

Plywood’s production performance was -5% to 2.8 million m3 and last year was described as “difficult”.

But a bright spot was a 3% increase in the Baltic states’ plywood production.

“The Baltic states is a major producer of plywood and very much getting more so. We are pleased to see that investment and pleased to see a growing amount produced in Europe of a very important product,” added Mr Pinnington.

Almost one-third of plywood is going into furniture. The EPF believes plywood is in a good space to benefit from a resurgence in Europe.

“When you put all of this together, our main product remains particleboard with almost 50% but we have seen softboard and OSB growing – together they now account for 21% of panel production and this is almost certainly going to increase.”

Mr Pinnington said the European wood-based panel industry’s better performance when compared against the wider furniture and construction industries last year demonstrated a clear market share gain for wood-based panels in Europe. “One never likes to record negative figures, but in this context they’re actually very strong.”

Looking further forward, the EPF remains concerned that increasing demand for bioenergy represents a threat to the wood-based panels industry’s ability to source sufficient raw material.

RESINS TRENDS

Also at the conference Wolfgang Gutting, vice-president of amino resins and nitrogen-based chemicals at BASF, explained market dynamics behind resins used in the panels industry.

Natural gas is the feedstock for amino resins, whereas it is oil for isocyanates. Methanol is currently at very high levels, driven by strong demand from China, from the woodworking industry and from the automotive industry.

Ammonia is also at a very high level, propelled by fertiliser, the main driver, while gas prices are also high currently.

Urea, which does follow ammonia, has had a sharp increase, and after a pause is now rising again.

Melamine is in short supply, mainly due to demand from the panels industry, which consumes 70% of it. Although demand is dropping in China, this and production outages will be factors in Q3 contract negotiations.

Regarding the outlook for MDI, this is purely supply and demand driven and has doubled in the last 12 months.

Looking more broadly at resins and the European Green Deal, Mr Gutting said a product carbon footprint (PCF) is being assessed for all BASF products. Today, the average PCF of these products is 2.3 (kg CO2e/kg) with the intention to reduce further. For resins, the value today is approximately 2.0, and ultimate goal is a 100% bio-based binder. BASF has developed a sustainable wood binder that is 100% bio-based and scalable to the industry demand (4 million tonnes for the EU), with standard application.

EPF ADVOCACY WORK

Kris Wijnendaele, technical director for the EPF, reported on the federation’s advocacy work, especially the New European Bauhaus (NEB) and the Renovation Wave.

The NEB was launched by Ursula von der Leyen, the EC president recently in her address to the European Parliament. Its intention is to build “a sustainable and beautiful future”, with three pillars (sustainability, inclusiveness and beauty).

“With wood we use the most sustainable product,” said Mr Wijnendaele. “Inclusiveness relates to the concept of affordability, which we can offer. Wood-based products are beautiful in design.

“To grasp this opportunity, we drove and created the wood4bauhaus Alliance to show our contribution to turn the built environment into a carbon sink. Renovation for energy efficiency will be important for wood-based panels in the future, even more than new construction.”

WOOD AVAILABILITY

On wood availability, the EPF said that the burning of biomass is currently increasing and is absolutely opposed to the cascade use of wood.

“We are looking very carefully at the revision of the RED II and the sustainability criteria,” added Mr Wijnendaele.

“It seems that the sustainability criteria will be enhanced, which we support. We do not agree with the under-estimated prospects for the use of biomass from the European Commission.

“We wait for the Commission proposals and expect to engage to secure suitable access for traditional industries, such as panels, to raw material markets free from distortions driven by subsidies for bio-energy.”

On formaldehyde, the EPF says it will not be forbidden. The emissions in consumer articles will be limited to a maximum of E1 according to EN 717-1 as proposed by ECHA. Discussions are ongoing, although delayed, as to exactly what the limit value will be.