OTHER NEWS 17 Jul 2015
North American Composite Panel Market: Strong Rebound with 4% YOY Growth until 2022 but not out of the woods yet
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.
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.
In this forward looking assessment, Pöyry’s ‘The Future of the Composite Panel Industry in North America, 2022’ report addresses the major fundamentals of the composite panel business: capacity, production, demand, end use applications and users, prices, profitability, wood supply, investments and industry structure.
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. 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." says Dr Cormac O’Carroll, Head of Forestry, Biomass and Wood Industry Practice at Pöyry Management Consulting.
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.
These are some of the key findings of Pöyry’s ‘The Future of the Composite Panel Industry in North America, 2022’ report. In this forward looking assessment; Pöyry addresses the major fundamentals of the composite panel business: capacity, production, demand, end use applications and users, prices, profitability, wood supply, investments and industry structure. For more information, please read the report below.
For further information, contact:
Head of Forestry, Biomass and Wood Industry
Pöyry is an international consulting and engineering company. We serve clients globally across the energy and industrial sectors and provide local services in our core markets. We deliver management consulting and engineering services, underpinned by strong project implementation capability and expertise. Our focus sectors are power generation, transmission & distribution, forest industry, chemicals & biorefining, mining & metals, transportation and water. Pöyry has an extensive local office network employing about 6,000 experts. Pöyry's net sales in 2014 were EUR 571 million and the company's shares are quoted on NASDAQ OMX Helsinki (Pöyry PLC: POY1V).