18 | Sector Market Update: Chipboard
SUMMARY
■Drier, summer weather did not bring an increase in demand
■Sales of P2 and MFC are steady but P5 demand is weak
■Chipboard prices are low and unlikely to rise in the short term
■Most traders predict little improvement until the end of Q1 next year
CHIPBOARD DEMAND LOW UNTIL HOUSING STARTS RISE
The anticipated pent-up demand for chipboard has failed to materialise and now the sector is waiting for a meaningful increase in housebuilding activity. Keren Fallwell reports
As with most building products, UK demand for chipboard is mired by the slow housebuilding market.
In the rainy months of spring and early summer the perception was there was pent- up demand for P5 chipboard and sales were being held back only by the poor weather. But when the weather improved mid-summer, P5 demand failed to follow suit. “It felt like there was pent-up demand waiting for good weather but I’m not sure what has happened,” a merchant told TTJ. A manufacturer told TTJ that sales of P2 into the UK furniture market had remained fairly stable, worktop sales were pretty steady, and small to medium-sized kitchen, bathroom and bedroom businesses were “quite busy”, but P5 relied on recovery in the building sector.
For the merchant, things did pick up for a short time, with June the company’s “best trading month by a long way”, before sales started to slow again.
“July wasn’t a disaster but it wasn’t that great; August has been very patchy,” he said. Some of the slowdown could be attributed to the normally quieter period when the summer holidays kick in but this year it seemed to be more than that.
Above: A producer said chipboard prices had decreased since the spring
The reduced demand has come at a time when some merchant companies have expanded their branch network and venture capital investment in the timber industry has
TTJ | September/October 2024 |
www.ttjonline.com
grown. This larger pool has led to increased competition and price battles and, as with other panel products, prices are around the same levels they were in 2020. “Prices are pretty much on the floor. People will shave off a few pennies here and there to try to win business but in terms of the cost of the product there’s nowhere to go. You can’t sell it for any less because you’re not making any money anyway,” a merchant said. “It’s quite bleak at the moment.”
A producer said chipboard prices had decreased since the spring and had now “reached the bottom”, but he had no plans to increase prices in the near future. Although chipboard prices might not rise, manufacturers’ costs will and he was particularly concerned about the upward trend of timber prices, which he described as “the biggest risk”.
Chipboard’s price deflation is illustrated by Timber Development UK’s statistics for the first five months of this year. Chipboard imports were down 2.4%, or 6,000m3
the same period in 2023 but the value was 13% lower.
The decrease resulted from a 10% drop in the average price of the basket of particleboard products as volumes fell and the 13% overall decline in value comprised a 6% decrease in the value of standard particleboards, a 19% fall in the value of MFC and a 13% decline in the value of other
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