What are the growth expectations in the ANZ wood-based panel sector?

News update by Margules Groome

  • Engineered wood-based panels such as OSB, LSL and PSL have market potential but are not produced in Australia; still small quantities are imported
  • Particleboard accounts for over half of the market in ANZ region
  • Low Pressure Melamine (LPM) market estimated to grow to 124 million m2 by 2020

There is limited interest from the Australian Forest Sector directed towards production of Oriented Strand Board (OSB), Parallam (PSL) or Laminated Strand Lumber (LSL) which are well-established products in other markets, such as Europe and North America.

Fig. 1: Australia particleboard demand. Left: Particleboard demand (in ‘000 m3) and its end-use segments in 2016; right: Australia housing approvals vs particleboard demand. Source: Margules Groome

Relatively small volumes are imported: New Zealand’s Triboard, OSB used as components for Structural Insulated Panels (SIPs) and I-Joists as well as for internal paneling in construction sector, as well as PSL/LSL. The market potential exists but the demand growth remains weak.

Australian patented Lignor products (Engineered Strand Lumber and boards) are yet to find a local investor/producer although an opportunity exists to take advantage of Australia’s hardwood plantation resources for value adding.

Australian reconstituted wood panels producers and consumers remain consistent with their traditional products (Particleboard, MDF and laminates). Over the past 18 months we saw proposals for new capacity developments and acquisitions. If some or all of these plans were to proceed, the ANZ market dynamics will change with new players entering, for example OneFortyOne Plantations and Borg Manufacturing (both Australian). This could lead to more efficient production, new products, new business models and improved value chains.

Both ANZ reconstituted wood panels markets are driven by the furnishing/cabinet making and building & constructions sectors (Fig. 1).

While not extensively used in New Zealand, particleboard remains Australia’s largest domestic market compared to Plywood and MDF in the reconstituted wood panel sector, averaging a 52 per cent market share over the last decade. In 2016 particleboard production reached its highest production level since 2011, at 955,000 m3 but its market share modestly declined to 49 per cent against the other wood panels.

More than 90 per cent of the locally produced particleboard was consumed in Australia – consumption grew at 4 per cent per annum over the past three years.

Despite a decline in 8+ storey apartment buildings in Australia, there is growth potential in the townhouses and mid-rise buildings market segments as well as in the commercial sector. The regional and global laminate flooring markets are currently at high levels and are not showing any signs of cooling down, thus also a good market opportunity for ANZ producers. Current champions for market growth in this segment are Eastern European countries, Russia, Canada, USA as well as China including Hong Kong.

Low Pressure Melamine (LPM) remains the main surfacing material with over 75 per cent of the Australian laminates market. Market signals are that it will remain unchanged; it is well promoted by the producers and well accepted by the market. LPM is mainly used for cabinet making – kitchen units and benchtops, cupboards, built-in-wardrobes and vanity units with a small growth noticed in the furniture manufacturing. The currently market size is estimated to be 111.5 million m2 and is expected to grow to 124 million m2 by 2020.

Beneficiaries of this growing market segment are mostly those producers that are highly integrated with both surfacing facilities as well as distribution networks.