Continuous strong cost increases worry the European wood-based panels manufacturers

On 13-16 June 2006, the European Panel Federation (EPF) and the European Federation of the Plywood Industry (FEIC) organised their General Assembly in Helsinki, Finland on the kind invitation of the Finnish Forest Industries Federation. For the third time, the federations shared a joint programme, providing the participants a unique occasion to meet all key players in the wood-based panels industries. With nearly 200 participants for the entire programme, this joint event proved to be a great success.

During the Open Part of the General Assembly on 15 June the EPF President, Mr Ladislaus Döry, explained that production and consumption of particleboard grew during 2005 and this positive trend continues this year. Within the EPF member countries, particleboard production amounted to 35.5 million m³ last year, which is an increase by almost 3%. Overall consumption of particleboard in Europe topped at 32.5 million m³. Furthermore, the particleboard trade increased sharply, especially within the European Union and the neighbouring countries. With few new capacities coming on stream in 2006 and 2007 and the favourable forecasts for the construction industry, the prospects for further growth in production and demand are promising for the particleboard producers.
MDF production was exceptionally high in 2005 climbing to 13.5 million m³, which is an increase by 13.7% underpinned by a continuing growth in the consumption. Last year, about 12 million m³ MDF was consumed in Europe, whereas exports to the Far East and America continued to decrease due to the unfavourable EUR/USD exchange rate. Production of OSB in Europe continued to grow at high pace, rounding the cape of the 3 million m³. OSB consumption set a new record of 2.5 million m³, underpinned by reinforced demand from in particular the resumed construction activities.
The production costs for the European wood-based panel sector increased sharply in 2005. The soaring oil prices had their impact on industry’s energy, transport and resin costs. Wood prices increased sharply too in 2005. Like for the other costs, there are important regional differences, but the general trend is that wood costs are rising significantly throughout Europe. One of the main reasons is that the authorities continue to promote the use of wood as a fuel for the production of so-called “green energy”. This short-sighted policy endangers the future of the entire wood-based industries, but in particular our sector. Consequently, wood costs are expected be set for a long term increase. In all, the EPF members fear that production costs will be increasing at a pace of around 5-10% per quarter and in certain regions this could even be an underestimation.
EPF is therefore urging the authorities at all levels to change the focus from supporting bioenergy production to developing actions to mobilise more wood. Furthermore, EPF is strongly advocating the recognition of wood-based products as carbon stores. Mr Döry was proud to report that EPF organised an exhibition entitled “Tackle Climate Change: Use Wood” in the European Parliament in Brussels in February 2006 in close co-operation with the European Confederation of Woodworking Industries in the framework of the CEI-Bois Roadmap 2010 project, which aims at increasing the consumption of wood products significantly throughout Europe. Coinciding with this exhibition, a book entitled ‘Tackle climate change: use wood’ was presented. It provides a definitive source of reference on issues related to wood’s role in reducing climate change. It contains a wealth of information on Europe’s forests, how wood use helps to slow global warming, the eco-efficient use of end-of-life wood as a bio fuel, as well as facts and figures on the European wood industry, which turns over more than 226 billion Euro annually in the EU-25 with some 2.9 million employees. Mr Döry also stressed that EPF is monitoring very closely all environmental issues that could affect the competitiveness of the European wood-based panel manufacturers.
Mr Uldis Bikis, President of FEIC and CEO of Latvijas Finieris, was pleased to inform the audience that the European plywood producers managed to increase their production by 3.5 % up to a new record level of 3,9 million m³ in the FEIC member countries. during 2005, This is especially thanks to the very strong performance by the manufacturers in Russia, Sweden and Ukraine who achieved growth rates above 20 %. Plywood imports continue to rise and attained 3.5 million m³ in the FEIC member countries (+ 3.2%) and 6.0 million m³ in the EU-25 (+ 0.5%). The main countries of origin of extra-EU plywood imports are Brazil (1 million m³), Russia (nearly 850,000 m³), China (630,000 m³), Indonesia (370,000 m³) and Malaysia (170,000 m³). Thus, the European plywood manufacturers are facing strong competitive pressure on their local markets. In particular Chinese imports were soaring, registering a growth rate of more than 100%. On the other hand, plywood exports by the FEIC member countries increased slightly by 0.4 % to 3.2 million m³. Finland and Russia are by far the biggest exporters and most exports were shipped to other European countries. The main extra-EU destinations were Norway, Romania, South Korea, USA and Switzerland, but these are rather small compared to the imported volumes.
Plywood consumption in the FEIC member countries recorded an upswing of 4.5 % up to nearly 4.2 million m³. Mr Bikis noted that it is encouraging to see that the plywood consumption increased in nearly all FEIC member countries, with exceptionally strong demand in Estonia, Ukraine, Latvia, Russia and Bulgaria in declining order of growth rates achieved in 2005. The largest plywood consuming European countries are the United Kingdom (1.32 million m³), Germany (865,000 m³), Italy (700,000 m³), France (590,000 m³) and the Netherlands (440,000 m³). Broadleaved plywood is following a strong upward path in Europe, attaining a market share of 55% of the total production, whereas the share of tropical species is decreasing. The blockboard production picked up after stagnating for several years, though it remains rather small in absolute terms with 285,000 m³.
Explaining the priorities under his Presidency, Mr Bikis announced that FEIC should strengthen the co-operation with the national member associations in order to co-ordinate activities aiming at expanding the markets for European plywood. After the FEIC General Assembly, Mr Bikis informed our correspondent that the plywood manufacturers are confronted with substantial cost increases like the other wood-based panels producers and that there is no reason to expect that this trend will change in the foreseeable future. Mr Bikis also reported that the FEIC General Assembly agreed unanimously to produce only plywood of at least “quality E1”. These qualities still emit some formaldehyde, but at a level largely below the recommendation of the World Health Organisation (WHO). With this decision, the European plywood industry confirms its commitment to ensuring the quality and safety of its products and the protection of the environment.

Both Presidents concluded by expressing their positive impression of this third joint EPF-FEIC General Assembly. EPF and FEIC will co-organise their Annual General Meetings in 2007 in Italy on kind invitation of their member association Assopannelli.

For more information, please contact:

Mr Kris Wijnendaele
EPF General Secretariat FEIC Secretariat
Phone: +32 2 556 25 89 Phone: +32 2 556 25 84
E-mail: info@europanels.org
E-mail: info@europlywood.org Internet: www.europanels.org
Internet: www.europlywood.org

The European Panel Federation (EPF) represents the European manufacturers of particleboard, MDF and OSB from 23 countries.

The European Federation of the Plywood Industry (FEIC) represents plywood producers from 20 countries.