Particleboard, MDF and EWP - Fastmarkets RISI › north-american...2020 | Fastmarkets | Outlook for...
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Outlook for the North American Particleboard, MDF and EWP Fastmarkets RISI North American Conference October 5, 2020 Steven Honeyman Economist, Wood Products 2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 1
Transcript of Particleboard, MDF and EWP - Fastmarkets RISI › north-american...2020 | Fastmarkets | Outlook for...
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Outlook for the North American Particleboard, MDF and EWP
Fastmarkets RISI North American Conference
October 5, 2020
Steven Honeyman
Economist, Wood Products
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 1
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Overview
• Particleboard
How will capacity changes affect the market?
• MDF
How will offshore affect the North American market?
• LVL
Will slow I-joist recovery spread to LVL?
• Wood I-joists
How will swings in input costs affect profitability?
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 2
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North American particleboard
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 3
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0
1
2
3
4
5
6
7
2000 2003 2006 2009 2012 2015 2018 2021
BS
F, ¾
-inch b
asis
Furniture R&R Residential Other industrial Nonresidential construction
North American particleboard consumption
Furniture has driven growth
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 4
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0
1
2
3
4
5
6
7
2000 2011 2015 2018 2019 2020 2021 2022
BS
F, ¾
-inch b
asis
Furniture Residential construction Other
North American particleboard consumption
Residential end uses becoming more significant
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP
56%
29%
42%
40%
5
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Sources of North American particleboard
• Demand largely met by domestic producers
• Imports represent a small portion of total supply
– Just 9.4% of total consumption in 2019 (345 MMSF)
• Strong US dollar has attracted increased imports
– Up from 1.6% of total supply in 2011
• The import share is unlikely to climb significantly over the forecast
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 6
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0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
2000 2003 2006 2009 2012 2015 2018 2021
BS
F, ¾
-inch b
asis
North American particleboard offshore imports
New domestic capacity will lower imports
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 7
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New particleboard capacity
• Arauco North America
– Grayling, Michigan: 424 MMSF
• Kronospan LLC
– Eastaboga, Alabama: 311 MMSF
• Egger Group
– Lexington, North Carolina: 339 MMSF
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 8
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Particleboard capacity closures
• Georgia-Pacific
– Hope, Arkansas: 200 MMSF
– Monroeville, Alabama: 150 MMSF
– Thomson, Georgia: 150 MMSF
• Arauco North America
– St. Stephens, New Brunswick: 122 MMSF
– Moncure, North Carolina: 148 MMSF
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 9
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770
1,101
0
200
400
600
800
1,000
1,200
Closed New
MM
SF, ¾
-inch b
asis
Change to particleboard capacity
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 10
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0
1
2
3
4
5
6
7
8
9
2000 2003 2006 2009 2012 2015 2018 2021
BS
F, ¾
-inch b
asis
Capacity Demand
North American particleboard capacity to demand
Demand growing slightly faster than operational capacity
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 11
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0
1
2
3
4
5
6
7
8
9
2000 2003 2006 2009 2012 2015 2018 2021
BS
F, ¾
-inch b
asis
Nameplate Capacity Demand
Particleboard nameplate capacity
Excess capacity has grown but closures kept the market from
loosening further
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 12
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50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
2000 2003 2006 2009 2012 2015 2018 2021
North American particleboard demand/capacity ratio
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 13
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150
200
250
300
350
400
450
2005 2007 2009 2011 2013 2015 2017 2019 2021
$/M
SF, ¾
-inch b
asis
US South US West
North American particleboard total costs
Cost pressures will ease slightly from recent highs
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 14
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0.80
0.90
1.00
1.10
1.20
1.30
2000 2003 2006 2009 2012 2015 2018 2021
Mill
realiz
ation/a
vera
ge t
ota
l costs
US South US West
Particleboard profitability improving
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP
US West will continue to lag the US South
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North American MDF
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 16
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2000 2003 2006 2009 2012 2015 2018 2021
BS
F, ¾
-inch b
asis
Furniture R&R Residential Other industrial
North American MDF consumption
Residential end uses the majority of consumption
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 17
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2006 2009 2016 2017 2018 2019 2020 2021 2022
BS
F, ¾
-inch b
asis
Furniture Residential construction Other
North American MDF consumption
Residential end uses the driving force for the market
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 18
37%37%
54%55%
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0
1
2
3
4
5
6
7
2000 2003 2006 2009 2012 2015 2018 2021
BS
F, ¾
-inch b
asis
Particleboard MDF
Total particleboard demand will continue to exceed MDF
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 19
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Sources of North American MDF
• Imports are a significant share of North American supply
– Imports were 30.6% of total consumption in 2019 (1.06 BSF)
– Up from an average of 28% between 2010 and 2015
• Strong US dollar has attracted imports
• The import share will increase as the US dollar remains strong
– New capacity will add domestic sources of MDF to meet demand
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 20
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0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2000 2003 2006 2009 2012 2015 2018 2021
BS
F, ¾
-inch b
asis
North American MDF offshore imports
Will remain elevated but below the 2018 historical high
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 21
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New MDF capacity
• CalPlant 1 LLC
– Willows, California: 140 MMSF
• Swiss Krono LLC
– Barnwell, South Carolina: 158 MMSF
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 22
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MDF capacity closures
• Georgia-Pacific
– Monticello, Georgia: 35 MMSF
• Arauco North America
– Eugene, Oregon: 87 MMSF
– Bennettsville, South Carolina: 142 MMSF
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 23
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264
298
0
50
100
150
200
250
300
350
Closed New
MM
SF, ¾
-inch b
asis
Change to MDF capacity
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 24
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2000 2003 2006 2009 2012 2015 2018 2021
BS
F, ¾
-inch b
asis
Capacity Demand
North American MDF capacity to demand
Capacity growing as demand suffers cyclical setback
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 25
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2000 2003 2006 2009 2012 2015 2018 2021
BS
F, ¾
-inch b
asis
Nameplate Capacity Demand
New capacity beginning operation
Operational capacity will reach nameplate levels by 2022
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 26
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50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
2000 2003 2006 2009 2012 2015 2018 2021
North American MDF demand/capacity ratio
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 27
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150
200
250
300
350
400
450
500
550
600
650
2005 2007 2009 2011 2013 2015 2017 2019 2021
$/M
SF, ¾
-inch b
asis
US South US West
North American MDF total costs
Costs relatively flat in coming years
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 28
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0.80
0.90
1.00
1.10
1.20
1.30
1.40
2000 2003 2006 2009 2012 2015 2018 2021
Mill
realiz
ation/a
vera
ge t
ota
l costs
US South US West
MDF profitability historically high
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP
US South will outpace US West in profitability
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North American LVL
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 30
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0
10
20
30
40
50
60
70
80
90
100
2000 2003 2006 2009 2012 2015 2018 2021
Mill
ion c
ubic
feet
Single-family Multifamily I-joist Other
North American LVL consumption
Residential construction driving growth
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 31
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LVL capacity
New
• Roseburg Forest Products
– Chester, South Carolina: 10 MMCF
Closed
• Boise Cascade
– Roxboro, North Carolina: 2.5 MMCF
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 32
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0
20
40
60
80
100
120
2000 2003 2006 2009 2012 2015 2018 2021
Mill
ion c
ubic
feet
Capacity Demand
North American LVL demand to capacity
Operational capacity approaching historical peaks
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 33
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0
20
40
60
80
100
120
2005 2007 2009 2011 2013 2015 2017 2019 2021
Mill
ion c
ubic
feet
Nameplate Capacity Demand
New capacity increases nameplate levels
Will keep operational capacity from reaching nameplate levels
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 34
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40%
50%
60%
70%
80%
90%
100%
2000 2003 2006 2009 2012 2015 2018 2021
North American LVL demand/capacity ratio
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 35
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6
8
10
12
14
16
18
20
2005 2007 2009 2011 2013 2015 2017 2019 2021
US
do
llar
per
cubic
foot
North American LVL variable costs
Costs will fall from recent historical highs
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 36
-
1.00
1.10
1.20
1.30
1.40
1.50
1.60
2000 2003 2006 2009 2012 2015 2018 2021
Price/v
ariable
cost ra
tio
LVL profitability improving over forecast
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 37
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North American wood I-joists
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 38
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0
200
400
600
800
1,000
1,200
1,400
2000 2003 2006 2009 2012 2015 2018 2021
Mill
ion lin
ear
feet
Single-family Multifamily Other
North American I-joist consumption
Closely tracks single-family housing starts
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 39
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0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2000 2003 2006 2009 2012 2015 2018 2021
Mill
ion lin
ear
feet
Capacity Demand
North American I-joist demand to capacity
I-joist markets remain well below previous peak
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 40
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0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2005 2007 2009 2011 2013 2015 2017 2019 2021
Mill
ion lin
ear
feet
Nameplate Capacity Demand
I-joist nameplate capacity
Still a significant amount of excess capacity in the market
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 41
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40%
50%
60%
70%
80%
90%
100%
2000 2003 2006 2009 2012 2015 2018 2021
North American I-joist demand/capacity ratio
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 42
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0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2005 2007 2009 2011 2013 2015 2017 2019 2021
US
dolla
rs p
er
linear
foot
Softwood flange LVL flange
North American I-joist variable costs
Costs will fall from recent highs
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 43
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0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
2000 2003 2006 2009 2012 2015 2018 2021
Price/v
ariable
cost
ratio
Softwood flange LVL flange
I-joist profitability recovering
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP
Profitability remains historically strong despite cost spikes
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Conclusions
• Particleboard
Excess capacity will require active management of operational
capacity levels or result in increased market volatility.
• MDF
Increasing demand and historically strong margins will benefit
domestic producers but continue to attract offshore imports.
• LVL
Consumption will grow with the housing market. Profitability will
improve as costs decrease over the forecast.
• Wood I-joists
Demand remains well below previous highs, but margins will
improve despite recent cost spikes.
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 45
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Thank you
NORTH AMERICAN LUMBER AND WOOD
PANELS FORECASTS, 5- AND 15-YEAR
www.risi.com/lumber5year
www.risi.com/lumber15year
www.risi.com/woodpanel5year
www.risi.com/woodpanel15year
LUMBER, STRUCTURAL PANEL AND PB/MDF
COMMENTARIES
www.risi.com/lumber
www.risi.com/structuralpanel
www.risi.com/particleboard
2020 | Fastmarkets | Outlook for Particleboard, MDF and EWP 46
http://www.risi.com/lumber5yearhttp://www.risi.com/lumber15yearhttp://www.risi.com/woodpanel5yearhttp://www.risi.com/woodpanel15yearhttps://www.risiinfo.com/product/lumber-commentary/https://www.risiinfo.com/product/structural-panel-commentaryhttps://www.risiinfo.com/product/particleboard-mdf-commentary/
