Demand for quality wood-based panels and laminates growing
Following the 2008 global financial crisis, recent years have brought noticeable changes to Australia’s economy and demography, with implications for the forestry sector. For instance, constant population growth has significantly altered demand for wood products, through a lift in housing activity, especially after years in which new housing demand was not met by supply. Despite these conditions, housing commencements showed cyclical volatility over time. This had a direct impact on demand for structural wood products and wood based panels.
Per capita consumption of relevant wood-based panel products almost quadrupled between the 1970s and early 2000s (from approximately 0.03 m3/person to 0.11 m3/person). However since 2003 it has declined to approximately 0.09 – 0.08 m3/person and it has not exhibited very significant growth (1% growth between 2014-15), as the chart below shows.
Australian Wood-based Panel Production and Consumption: 2008- 2014 (km3) Imports and Exports of Wood-based Panels into Australia: 2005 - 2015 (km3)
Most of Australia’s Particleboard production is used domestically, with imported volumes showing a slightly increasing trend because of the relatively high price of the product on the Australian market and favourable exchange rate. Significantly, Australia became a net importer of Medium Density Fibreboard (MDF), while years ago it was a net exporter.
Australia’s wood-based panels production is partly linked with the New Zealand industry, not only due to its similarities, such as raw material (wood species and quality) and geographic location, but also due to their production capacities and common ownership such as that by the Fletcher Building Group and Rank Group. These two corporations own more than 60% of the Australian domestic Particleboard and MDF production capacity through Laminex and Carter Holt Harvey. A relative small number of players provides the rest of the local production capacity.
Figure 9: Australian Particleboard and MDF producers
Source: Sciencetech Consulting
In Australia, the wood-based panels sector is well-established and benefits from a relatively high level of integration of the Particleboard and MDF manufacturing with the production of laminate flooring, panels lamination and impregnation, doors and worktops.
The majority of demand for wood-based panels and associated added value products is driven by the furniture and construction sectors. Furniture, flooring, doors and kitchen units and benchtops constitute approximately half of the demand, with the remaining proportion related directly to the construction sector.
Sustained growth in building approvals, including not only units and apartments but also commercial buildings such as aged care, health, entertainment, recreation and short-term accommodation buildings, is providing vigorous prospects for the Australian wood-based panels manufacturing industry and importers as the chart below – related to aged and healthcare – demonstrates.
Number of Aged/Health Care Buildings by Value: 2006-2014
As a result, demand for kitchens and bathroom furnishing is increasing. Also, large developments such as hotels and casinos complexes are escalating the consumption of high quality wood based panels, decorative products and laminates.
At the same time, advanced, innovative paper based surfaces are gaining market acceptance, while MDF surfaced with wood veneer panels achieve returns at the higher end market.
It should be noted that the renovations segment also has a significant market share as a user of kitchen and bathroom fittings, yet the sector is underestimated due to the lack of consistent statistical data. Cabinet-makers are surrounded by positive data and are seeking to maximise their capacities to fulfil what is currently strong demand.
Thus, we can expect that there are commercial opportunities for both local producers and importers of high-quality wood panel products in the short to medium term. As the capacity of local production closes in on its peaks, local importers may be the beneficiaries, as long as they meet market expectations for products that demonstrate environmental credentials and compliance with Australian safety and technical standards.
This feature represents a continuation of IndustryEdge’s endeavour to provide up-to-date insights into the markets of value added wood products. These editorials are the result of our collaboration with Dr Mihai Daian of ScienceTech Consulting.
Reprinted by agreement with IndustryEdge, the publisher of the monthly, subscription only Wood Market Edge and Pulp & Paper Edge. Go to www.industryedge.com.au for further updates and complimentary resources.