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40 | Sector Focus: Panel Products


◄ So six months on how does Mr Brettenthaler assess the current state of health of the industry?


“Demand for wood-based panels in western Europe is considerably weaker than over the past years but there is a difference in the various segments,” he said. “What I see from the Swiss Krono perspective and from the EPF, is that the downturn has been strongest when it comes to laminate flooring, which is clearly now suffering the worst effects. But also demand for OSB is down considerably. Only MFC furniture board and related products fare better.”


Laminate flooring’s downturn, he added, was the result of the high consumption of flooring during the DIY home makeover boom during the pandemic, which has now ended. The market environment for OSB, he added, was negatively impacted by strongly deteriorated financing conditions of private home builders when rising interest rates and price uncertainty for many building materials drastically reduced the financing possibilities.


He referenced the decision of large German housing contractor Vonovia in January not to commence new construction projects in 2023 as a sign of the jitters caused by the tougher economic environment. In an interview with Westdeutsche Allgemeine Zeitung, Vonovia chief development officer Daniel Riedl said the company would wait “until capital is available again at acceptable interest rates or until a corresponding subsidy makes construction possible”.


Back to the OSB product specifically, Mr Brettenthaler said that January had been good for OSB business, but had since weakened.


“It could go either way, it could stay low or it could pick up in the spring.”


Mr Brettenthaler said the halt of Russian birch plywood exports into Europe should help increase sales of OSB, but there has not been a strong impact yet, due partly to existing high stocks of birch ply, which are now depleting.


For the large, traditional interior boards


market – MDF and particleboard – demand has been more resilient and “surprisingly stable”.


The European furniture industry is reported to have experienced a strong reduction in orders, but demand for particleboard and MFC has remained stable.


“But the lack of new builds at the moment will lead to decreased demand for kitchen cabinets in the coming months.” Prices and margins for products have remained reassuringly quite stable. The supply side has of course been a challenge for wood-based panel producers in recent times, be it on the raw material, chemicals or energy fronts. “As far as I see it the wood-based panel producers have all reacted in the same way by reducing production,” Mr Brettenthaler explained.


“Nobody has really been building up stock or trying to be aggressive in cutting prices, but have adapted in the same way. It has been producing slower and optimising production.


“There is stabilisation on the chemical cost front, with PMDI – important for OSB – being more stable. There has been strong volatility in urea prices but it has reduced over the past month. Very high melamine prices have now come down a little bit but are still a lot higher than they were traditionally.”


For wood raw materials, Swiss Krono has seen strong price and cost increases, especially in Poland, but other markets are more stable.


“Before the Ukraine war, the general industry perspective was that roughly 10% of Polish roundwood consumption came from Belarus. This stopped, which has led to a knock-on effect to the west.”


THE ENERGY QUESTION


The question of energy – both pricing and availability – has been a hot potato for the sector, with Mr Brettenthaler and others warning governments and policy makers of the importance of affordable and available energy for operating panel plants. Fears expressed last summer that some mills may not get enough energy to operate have thankfully not transpired.


“There is no shortage of energy in Europe, which is good news,” he said. “However, I think the problem is not solved. In my opinion, there are two different directions developing on a European policy level,” he added.


“I think those countries that have a clear policy on nuclear power have a clear strategy, a clear political will and plan. Then we have Germany where there is no plan.” Mr Brettenthaler believes Germany’s big emphasis on green energy policies was a mistake, which has not ensured energy security.


“Fortunately, there has been no stoppage of production in Europe because of a lack of energy supply,” he said. “There has been because of too high prices to make it profitable but there was no blackout or shutdown so far.”


High spot prices of gas last autumn, which caused great consternation did not end up leading to the problems forecast and gas prices fell back. But energy intensive MDF production has become more expensive than in the past.


“This leads, in my opinion, to the other worrying trend. There are areas of the world


Above: The Menznau plant in Switzerland TTJ | May/June 2023 | www.ttjonline.com


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