Global wood-based panel surfaces market re-positioning for growth: Poyry

Surfacing materials benefit from global demand growth for wood based panels, especially as manufacturers now understand its importance in stepping up the value chain. This trend is however, at the expense of solid wood and veneer products, according to a new report “Panel Surfacing up to 2020” released by research consultancy Poyry.

Over 70 percent of surfaced wood-based panels are used for furniture, while the rest are used in construction-related products such as flooring and doors. Many consumers prefer lightweight, ready-to-assemble and low maintenance furniture at affordable prices.

2010 to 2015 was an excellent period for surfacing materials. Post-recession demand recovery drove the global market to an all-time high of 6.6 percent growth per annum. Out of the six main surfacing materials the two clear winners were low pressure melamine (LPM/TFL) and laminates. Natural veneer experienced a 5 percent market share loss.

When comparing regional performance, Asia’s double digit growth resulted in an 11 percent market share gain, translating into a 59 percent share of the total global surfacing materials demand.

Looking ahead to 2020, HPL and CLP laminates are predicted to experience the highest relative growth. However in absolute volume terms low pressure melamine is set to remain the dominant material, accounting for over 60 percent of the global demand.

The only material with negative future growth (-0.5 percent per annum) is veneer. Its performance, cost and sourcing issues are being constantly challenged by its main rival, low pressure melamine.

Veneer is predicted to fall in popularity from the second most-used material to fifth place by 2020. All other materials are forecast to grow between two and four percent per annum.

“Growth started from a low base after the global financial crisis,” Johan Carlsson, principal at Pöyry Management Consulting explained. “Additionally, China is expected to accelerate transition from manufacturing to a consumption and service-driven economy. At the same time, there is little hope for significant growth from other BRIC countries as the recession in Brazil and slow recovery result in marginal demand growth in South America. Demand in Russia will remain at current levels with the potential for further falls in the short term if oil prices do not improve. Last but not least, the Eurozone debt crisis and Brexit uncertainty continue to hamper market growth in Europe.”

There has been significant investment in wood based panel production capacity in Southeast Asia to meet growing demand. However, wood fibre scarcity in this region is likely to be a game changer in the long term. By 2020 it is not likely that China’s position as the world’s largest consumer of surfacing materials, accounting for over half of global demand, and the number one furniture producer in the world, will change.

Overall, future surfacing materials market growth is going to slow down to some 3 percent per annum in the most likely scenario.