It is hoped that 2013 will be remembered as the year when the panel sector finally started its recovery from the recession. The long awaited 'green shoots' of economic activity in the construction sector started to show and as the year progressed, orders improved. The reduction in capacity as a consequence of the closure of a plant on Merseyside in the previous year also had a positive impact on domestic particleboard producers in 2013.
In line with increased activity in the construction sector, demand for Particleboard has improved.
Oriented Strand Board (OSB) has experienced uplift in demand, again due to the increased activity in the construction sector. Plans have been announced by a UK OSB producer for significant investment at one of its UK sites.
Medium Density Fibreboard (MDF) did not experience such a favourable year as OSB and Particleboard did, with demand best described as being sluggish.
In general, wood supply to the panel sector was good during 2013. Sawmill activity increased as the year went on, with resulting increased availability of chips and sawdust. Roundwood came under continuing demand from the biomass sector, but most panel mills were able to procure sufficient roundwood for their needs.
The increasing volumes of Larch arising as a consequence of Phytophthora ramorum disease will undoubtedly present challenges; the ability of the panel sector to absorb some of this material is likely to be relatively limited.
The pulp and paper industry experienced another year of tough challenges. The measures that companies had implemented to reduce production capacity, improve efficiencies and increase product mix started to take effect from the middle of 2013.
The market demand for newsprint has been relatively good, but this has been the result of the reductions in production capacity through shutdowns. Newsprint prices showed an increase of approximately 5% in the second half of the 2013. The demand for printing paper in Europe fell by 5% in the year. There is an overcapacity of magazine paper, resulting in pressure on selling prices. Machine finished (MF) magazine and Book paper continue to perform well, with an increase in sales by 10%.
The Virgin Fibre Board market remained positive, with Paperboard deliveries to Europe from European producers increasing by 4% on 2012. Selling prices increased slightly, but this was offset by the strong Krona for Swedish producers.
UK producers saw improved market conditions during 2013. This has been helped by strong demand from Europe, driven by favourable exchange rates, resulting in increased volumes and profitability.
Iggesund Paperboard successfully commissioned their new biomass-fired combined heat and power (CHP) plant at their Workington site early in 2013.
Wood fibre supply in the UK has been fairly tight, with strong demand across all sectors of the wood using industry. The main contributory factors being favourable exchange rates, resulting in increased market share in the UK and continued growth in export volumes. Forest owners are beginning to see the benefit of the increased demand manifesting itself in increasing sales prices for their forest products.
Report compiled 14 April 2014.