In the medium to long term, capacity building in the panel industry has a tendency to lead production and consumption by a relatively small margin. Logically, this will always be true in a growing and mature market, for without new capacity there can be no new production.

In the early days of the MDF industry during the 1970s and much of the 1980s, there could be significant surges in capacity, which were well ahead of consumption. Regional markets could make up shortfalls in demand by imports, or the industry could export the surpluses.

Lead times for new mills for the industry have tended to reduce if only equipment delivery, erection and commissioning are taken into account – eighteen months is not exceptional. If we extend lead times to include client planning, decision making, permit negotiations and fund raising, then three to five years might be the norm.

Accordingly, these decisions often do not reflect the general market conditions prevailing when the new mills are finally commissioned.

The results of this year’s capacity survey in Europe show greater enthusiasm than market conditions might support. In North America, the dire market conditions parallel the capacity development.

The aggregate MDF capacity for Europe and North America reached 23,098,000m3 at the end of 2007 – an increase of 2,423,000m3 or growth of 11.7%. This is a little above the forecast made at the same time last year.

Six new mills – one in North America and five in Europe – are recorded, which is the highest number for several years. In addition, Turkish data has been revised with help from the leading producers.

Whether the current market conditions are conducive to a happy landing by these new ventures remains to be seen. When the mills were first considered, global recession, cost inflation and wood supply were not commonplace topics.

The 2008 survey provides capacity listings to end-2007 and itemises new projects to 2009 and beyond. As usual, it is published in two parts: the first including North America and Europe in this issue; and the second, ‘The rest of the world’ will be published in the August/September issue of WBPI.

The author and the editor of WBPI remain grateful to all those individuals and organisations which contribute to the preparation of the survey. The sources used include associations, panel equipment suppliers, trade journals and panel manufacturers themselves.

Their contributions are crucial and the online enquiry forms for both MDF and particleboard are available at We are pleased to receive updated information at any time of the year for either product.

This year particularly we would like to receive more participation in the business barometer and survey of non-standard production. Although capacity details are attributed to individual mills, the other information is aggregated so that mills can remain anonymous.


European capacity

Total European capacity has been recorded at 17,074,000m3 at the end of 2007, a growth of 14.3%.

However, the Turkish listings have been modified again after the 2007 revision and show a growth of 929,000m3 on end-2006 capacity without any new projects being commissioned.

There was a new Turkish mill, Yildiz Entegre, recorded in 2007 of 300,000m3 capacity. Other new start-ups for 2007 include Kronospan in Mohacs, Hungary; Pfleiderer in Grajewo, Poland; Interbon in Spain and FBB (Classen) in Germany. Only a proportion of this latter mill’s capacity is shown, with the balance allocated to 2008.

Capacity creep in 2007 was not as great as anticipated which might reflect the increasing number of new lines.

The original EU15 countries saw two new lines during the year and the extended EU27 saw a further two lines. Turkey provided the other two.

The EU15 accounted for 66% of all European capacity at the end of 2007 with the other 12 member states amounting to 1,953,000m3 or 11.4%. Turkey enjoy 2,751,000m3, or 16.1%, while Russia stood at just 234,000m3 (1.4%).

A significant event during the year was the disposal by Metso of most of the old Sunds Defibrator panel board business – although Metso has retained the refiner production as it is highly relevant to pulp production. Dieffenbacher and Siempelkamp have divided the spoils. Siempelkamp acquired the press line – ex Küsters and based in Germany – and Dieffenbacher has acquired forming and panel handling systems based in Finland and Sundsvall.

The old ‘panelboard’ division was rightly famous as the principal pioneer of MDF lines outside North America and a major promoter of MDF as an advanced material for many different types of wood processor. Prior to that Sunds was the world’s leading supplier of hardboard plants and doorskin plants. Its expertise in fibreboard was unparalleled for a couple of decades until the continuous press was proved to be technically consistent.

Without their own continuous press, Sunds found it increasingly difficult to complete for turnkey plants. This coincided with relatively frequent changes in ownership, culminating in a disparately located set of business divisions, collectively becoming the rump of a much larger enterprise.

This is not to detract from the collected fibreboard wisdom of its staff and their contribution to the panel industry. The company name will live on in its refiners, forming machines and doorskin plants.

Future changes in Europe estimate six new mills with an aggregate capacity of 1,160,000m3 expected during 2008. In addition, the FBB plant will complete its final phase of commissioning and the Pfleiderer mill at Nidda will be expanded. Three mills will be located in Turkey – Kastamonu, Starwood and Turanlar – and a further three (at least) mills are expected to open in Russia. These changes are listed and quantified in Table 1.


European Capacity Development

Total European Capacity end 2006                                    14,932

Total European Capacity end 2007                                    17,074


Capacity due by end 2008

Turkey Kastamonu            360

Starwood            150

Turanlar            150

Poland Homanit            200


Russia Abinsk MDF            150

Rimbunan            150 (?)


Germany FBB (Classen)            160

Pfleiderer Nidda            50

18,444 (+ 8.0%)

Capacity due by end 2009

Turkey Yildiz Entegre            300

Starwood            495


Russia Pfleiderer            411

Russia Laminate            350

000 Partner Tomsk            260

Taiga-Shenjan MDF            80 (?)

20,340 (+ 10.2%)

Beyond 2009

Russia Kastamonu            300

Germany Glunz Meppen            ?            20,560

There were few recorded instances from the mills of capacity modifications, however other sources suggest upgrades and possible expansions in capacity at Pfleiderer Meppen; Medite Clonmel; Alfa-Wood Greece; Kronospan Szczecinek, Poland; among others.

In 2009 a further six mills are envisaged.

Two will be in Turkey, namely Yildiz Entegre and Starwood.

Four will be in Russia and include the intriguing Sino-Russia joint venture of Taiga-Shenjan MDF.

In last year’s listings, two Kronospan lines in Poland and Russia were shown. Neither is believed to have been achieved. Additionally, Egger switched its Romanian line from MDF to particleboard.

Despite these deletions, European capacity is estimated to reach 20,340,000m3 by end-2009, representing a 10.2% increase over 2008 and a significant addition over the estimates made last year.

There are other projects in the pipeline for after 2009, two of which are a Kastamonu plant in Russia and an expansion at Glunz, Meppen. There are also some other anonymous projects for Russia and the Middle East. The author will be pleased to hear of any expansions or new lines which are rumoured or planned anywhere in the world.

There are a number of interesting features to this growth. Firstly it is taking place against a very uncertain economic background – especially for 2008 and 2009. It might be argued that circumstances in Turkey and Russia are special but it is hard to see that either country is entirely insulated from the economic chill.

Secondly, the changes described have a marked impact on the sub-regions within Europe.

Changing Importance of European Sub-Regions

‘000 m3

2007            %            2009            %

EU 15            11,266            66.0            11,476            56.4

Other EU            1,953            11.4            2,153            10.6

Turkey            2,751            16.1            4,206            20.7

Russia            870              5.1            2,271            11.1

Others            234            1.4            234            1.2

______            _____            ______            _____

17,074            100.0            20,340            100.0

The gains made by Turkey and Russia are self-evident and the stagnation in the original core market, EU 15, is quite dramatic.

Thirdly, it is interesting to note the number of new projects which are specifically thin MDF or high density (HDF) board. It is not just applications as a laminate flooring substrate which influence this – a few new plants are configured to produce 1.5mm and upwards.

North American Capacity

Not surprisingly, the North American market has returned to sluggishness. There has even been a slowdown in acquisitions and mergers.

Aided largely by Kronospan Alabama coming on stream, total capacity grew to 6,024,000m3 by end-2007, or 4.9%. This improved the share held by the US compared with Canada. (We apologise for confusing readers last year by miss-stating that Kronotex, South Carolina would come on stream in 2007).

Mills reported hardly any capacity creep during the year, which is hardly surprising given the ravages experienced by the North American wood industry as a whole since the end of 2006. Housing, furniture, cabinetry, mouldings – there is hardly a wood using industry that has not experienced significant declines in demand and production over the past 18 months. They may well be facing a further 18 months of decline and stagnation before an improvement is felt.

Future Changes in North America

The impact of such dire domestic trading conditions has seen two existing players close their operations, probably for good, as shown in Table 3.

North American Capacity Development

Total North American Capacity end 2006                                                5,743

Total North American Capacity end 2007                                                6,024


Capacity due by end 2008

Uniboard            La Baie            Quebec            (270)

Great Lakes MDF                        New York            (124)            5,630 (- 6.5%)


Capacity due by end 2009

ACT            Moncure            North Carolina            212

Kronotex                        South Carolina            300

Industrias Emman                        Ocotlan            40            6,181 (+ 9.8%)

Uniboard at La Baie, and Great Lakes MDF in New York State, have closed already in 2008 for a decline of 6.5% in total North American capacity. The new projects reported last year each now seem to have slipped from an expected 2008 start-up to a 2009 start-up. These are ACT Moncure, Kronotex South Carolina and Industrias Emman in Mexico.

If they do go ahead, total capacity will rise by 9.8% but this is still considerably below even the modest expectations of a few years ago.

Environmental regulations in the MACT and CARB, together with domestic wood availability and costs of all materials and labour, are squeezing the MDF and particleboard industries very hard. Currency is also playing a role.

The strong Canadian dollar is hurting that country’s trade with the US, while the weak US dollar is inhibiting imports. If the housing/construction crisis will be as extended as believed by some, despite the long term underlying positive household formations and housing starts, the panel industry could see further rationalisations and closures. A number of companies will have to negotiate the mire before they can reach the warm, sunny uplands of recovery.

Non-Standard Production

Unquestionably, non-standard grades and specialities are evident in existing and new mills. Much of the new capacity installed is capable of producing laminate flooring substrate (both in Europe and North America). In 2007, it was postulated that there is now a division in the MDF industry between those operators who produce laminate flooring and those that do not. Laminate flooring grade is non-standard in the broadest sense but a commodity grade within the intended application.

Mills in North America and Europe (and elsewhere) are either fully integrated with one line at least dedicated to substrate for their own flooring production or concentrated on substrate for sale to third party laminators.

Mills without an interest report 0 to 5% only of their production for this application compared with other mills which report 85 to 95%. It is difficult to establish industry means for substrate productions based on a sample of mill returns.

On the other hand, it is clear that even existing producers, in general, are attempting to increase their non-commodity grades. Table 4 shows how this type of production is expected to grow.

Non Standard MDF Production %

2007            2008            2009

North America            17.7            21.1            22.2

Europe            25.0            27.0            29.0

A steady increase is evident in both regions but North America is closing the gap slowly with Europe – at least in percentage terms.

Business Barometer

These results derive principally from existing producers, so the new mills and their operators in Turkey and Russia can conceal their early optimism.

North American Business Barometer

2007            2008            2009

Production            100            98.2            101.2

Prices            100            106.6            111.2

Cost/m3 100            105.0            113.0

European Business Barometer

2007            2008            2009

Production            100            102.2            106.1

Prices            100            98.5            102.9

Cost/m3 100            103.0            105.2

The Business Barometer tables summarise the industry’s views.

North America is more sanguine regarding production in 2008 but perhaps shows too much bullishness in 2009. There is a feeling that prices will have to rise as indicated (over 6% in 2008 and 5% in 2009) to match the cost increases. If imports can be held at bay, then it may be possible to attempt some price gains.

In Europe, there is less pessimism about increasing production, but again this may be more hopeful than realistic. Certainly, the strong Euro will not aid exports outside the Euro zone.

Prices are less dynamic than costs which points to a sharp decline in profitability in 2008 and 2009. The more the market segments into standard board, flooring substrate, HDF and THDF, then the greater the opportunity to maintain the various price levels.

This author for one has seen falling demand and rising costs in the panel industry before and it takes a lot of discipline and deep pockets to survive.

How the Listing was Compiled

The WBPI listings for 2007 (2006 figures) were reviewed and modifications made using other published sources and data received directly from the mills. Published information was reviewed for news of capacity changes. These sources included relevant trade magazines, association reports and equipment suppliers’ reference lists.

Self-completion enquiry forms were distributed to the mills, requesting current and future capacity data. These forms contained the information the mills provided the previous year. Other questions were asked about non-standard production, future production rates, price movements and cost changes. The form was also posted on a special website. Responses amounted to 61% of the North American industry and 31% of existing European capacity.

The mills’ own reported capacities are used wherever possible because this is the basis upon which they make their estimates of future capacity and production changes. Where this information is not available, published sources are used, usually on the basis of 330 operating days per year.

Conversion of ft² to m3/year is made with 1,000 ft² equal to 1.77 m3.

John Wadsworth is the managing director of Intermark. Based in the UK, he has been researching and consulting in panel products globally for more than 26 years. Contacts: Tel. +44 (0) 1376 501565, Fax: +44 (0) 1376 501557, email: .