North American composite panel market to see strong growth by 2022

Source:
Pöyry/Fordaq
Views:
3115
  • text size

After a dismal decade, North American composite panel producers can finally breathe a sigh of relief: the worst is over and the future is looking positive, according to the international consulting and engineering company Pöyry. The composite panel market peaked in 2005, followed by a steep decline and bottomed out in 2009. Since then the market has been growing, stimulated by the economic recovery and the revival of the furniture and construction markets which are the growth engines for composite panels.

Although Pöyry expects 4% year-on-year growth until 2022, the 2005 peak will not be reached yet. To explore what might happen going forward, Pöyry has adopted its proprietary methodology, which in a unique way (incorporating advanced linear programming techniques) combines capacity, market and pricing forecasting to generate three scenarios: central, dynamic and stagnant. Only under the dynamic scenario, is the 2022 market likely to show a full recovery. Unsurprisingly, the young Mexican market is going to be the fastest growing in the region, albeit from a low base.

‘As the tide has changed, the North American composite panel industry is gaining the confidence to grow' says Dr Cormac O'Carroll, Head of Forestry, Biomass and Wood Industry Practice at Pöyry Management Consulting. ‘The market leaders such as Arauco, Uniboard, Masisa and others have already green lighted their investments, which will bring combined more than 400 million square feet of new capacity to the market over the next two years. This represents less than one fifth of what is going to be needed by 2022, if Pöyry's central forecast is realised'. The Pöyry model analyses not only the capacity gap, but also the impact of new capacity addition on market prices, as well as providing insights for where new capacity should be located (subject to full feasibility).

However, a decade-long decline has had a negative impact on the industry with many mill closures and market exits. The industry is therefore facing a number of challenges, competitiveness being the major one. Despite recent consolidation moves, the value chain remains fairly fragmented with an aging asset base which remains exposed to imports from Asia, Latin America and Europe.

The predicted growth curve should therefore encourage the industry to invest not only in new capacities but also in new technologies and business models. ‘By comparison with its European counterpart, the North American composite panel industry is some years behind in terms of innovation. European trends, such as lightweighting or digital printing, have not yet made significant inroads in North America, but there are some promising signs', notes Cormac O'Carroll.

The North American composite panel sector has a major advantage compared to other industry peers: a competitive lumber supply. When combined with the right operating model this can be a unique platform for building a profitable, sustainable and potentially more globally relevant composite panel value chain.

Post comment
Showing 1 comments:

Vesa Ahonen
"...the furniture and construction markets which are the growth engines for composite panels." Which wooden panels does the term composite include? Development in different wooden panels may vary a lot e.g. MDF vs. plywood.