Sector Market Update: MDF | 23
SUMMARY
■ MDF demand is exceeding supply by 20-30%
■ Manufacturers have rationalised their product offerings to optimise press output
■ Double-digit price rises are now a regular occurrence
■ A shortage of HGV drivers is creating delivery problems
STRIVING TO KEEP MARKET SUPPLIED
MDF supply is falling short of demand and allocation could continue into Q2 next year. Keren Fallwell reports
The extraordinary global demand for timber continues unabated and, as with all wood products, MDF supply is short, the market is on allocation and prices are rising regularly and significantly. It is generally agreed, TTJ was told, that MDF demand is outstripping supply by 20-30%. Some MDF products were put on allocation in October 2020 and other products quickly followed and, with no change in demand forecast, allocation is expected to remain in place until spring or early summer next year.
“Demand will have to come off a long way from its current position before we can think about relaxing allocations,” said a manufacturer.
Another manufacturer said he had never experienced such a long period of allocation, and expressed his frustration at having to impose it. “I hate it. We want to be able to supply what the customer wants,” he said. As with other timber products, the
exceptional demand is driven by a global building and DIY boom as people upgrade their homes and governments recognise the pivotal role construction will pay in the post- Covid economic recovery – and the busy and lucrative US market is drawing product from countries that traditionally supply the UK. The MDF sector is also suffering the effects of more than a decade of low investment. After the global financial crisis in 2008 a lot of capacity was taken out and not replaced so the current market is absorbing everything that is produced.
This constant, heightened demand means MDF manufacturers are producing as much as
they can and distributors and merchants are focused on purchasing as much as they can. One merchant estimated that 15-20% of his workforce was dedicated to trying to secure products across their range, while another said there was no time for business development. “We don’t need a development strategy because it’s a matter of get as much as you can and we’ll sell it,” he said. He believed the company’s MDF mouldings sales would be up 50% in volume and 73% in value year-on-year, while for MDF sheets the volume would be 25% higher and sales value 40% up.
Along the supply chain traders are scrabbling for supply. One merchant said he had purchased from other merchants, just to keep product on the shelf, while back in May, a distributor already had plenty of orders for July and August. The distributor was also waiting for part of an order he had placed last November.
He added that he had managed to secure “bits and pieces” from European sources, for example Belarus, but in “weird sizes” such as 2440x1830mm.
In order to optimise press capacity and speed and to supply as much volume as they can, manufacturers have rationalised their product offerings, including removing low volume, high margin bespoke items or lower or higher thicknesses. One manufacturer said he had also increased minimum order quantities so presses were kept “stable and steady”.
“It’s a case of trying to optimise volume output from the mills,” said another manufacturer. “We have clear plans with ►
Above: MDF mouldings sales could be up 50% in volume year-on-year PHOTO: SAM
www.ttjonline.com | July/August 2021 | TTJ
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