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The Fall in Demand for Furniture Should Stop MDF Price Rally in the United States

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The Fall in Demand for Furniture Should Stop MDF Price Rally in the United States

IndexBox has just published a new report: ‘U.S. – MDF – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Prices for MDF in the U.S. continue to shoot up amid a shortage of the product and the high demand from the furniture industry. Other factors that led to the jump in prices include the high cost of woody materials and resins for manufacturing MDF as well as increasing container freight rates. Strong demand for the product has led to a spike in imports to the U.S. High prices for MDF negatively affect furniture sales, which have been decreasing in recent months due to a slowdown in the construction boom noted at the first half of the year. The fall in demand for furniture, coupled with the beginning of a decline in the cost of wood raw materials should lead to a decrease in prices for MDF in the coming months.

Key Trends and Insights

While the cost of sawnwood is rapidly declining, the price of Medium Density Fiberboard (MDF) in the U.S. continues to rise. According to the U.S. Bureau of Labor Statistics, the producer price for MDFs produced on the domestic market increased by 8.4% from June to July of this year. July 2021 prices exceeded those from the same period in 2020 by 30.3%.

The reason for the spike in prices was the shortage of MDF in the American domestic market, which arose amid the high demand for furniture. In the first half of 2021, total furniture sales and home furniture stores in the U.S. grew by 38% compared to the same period in 2020.

Another significant factor was the noticeable rise in the cost of basic resources used to manufacture MDF, such as resins and woody materials. The producer price for thermoplastic resins in July 2021 increased by 63% compared to July 2020, while the price of thermosetting resins rose by 11.8% in the same period.

The jump in freight rates due to the lack of container traffic has had a significant impact on the final cost of MDF. According to the data from the Baltic Stock Exchange and the Freightos company group, the global container freight index of spot sea freight rates for 40-foot containers peaked in August 2021 and exceeded $10K.

The U.S. remains the world’s largest importer of MDF. Strong demand stimulated imports of MDF into America., which doubled from 2019 to 2020 and reached 2.3M m3. Canada, Chile, and Germany provide about 66% of all MDF imports to the U.S.

Due to steep prices, American wood-based product manufacturers have made huge profits this year. One of the largest producers of processed wood building materials in the U.S., Boise Cascade Co, reported a net income of $303M in the second quarter of 2021, which was 9 times the net income taken in for the second quarter of 2020. UFP Industries, Inc. posted a positive financial result, which took in record net earnings of $173M, a 161% increase compared to the same period in 2020.

The high prices for MDF are set to elevate the cost of furniture, reducing demand for it. While producer prices for commercial and household furniture rose by an average of 2% per month from May to July this year, total sales of furniture stores fell from $12.3B to $ 1.9B. Combined with the declining cost of woody materials for manufacturing MDF, the drop in demand for furniture should trigger a decrease in prices for MDF in the coming months.

American MDF Imports

In 2020, approx. 2.3M cubic meters of MDF were imported into the U.S.; growing by +32% compared with 2019. In value terms, MDF imports expanded by +4.6% y-o-y to $1.1B (IndexBox estimates) in 2020.

Canada (570K cubic meters), Chile (500K cubic meters) and Germany (431K cubic meters) were the main suppliers of MDF imports to the U.S., together comprising 66% of total imports. China, Brazil, Austria, Turkey, Viet Nam, New Zealand, Argentina and Mexico lagged somewhat behind, together comprising a further 27%.

In physical terms, Canadian MDF shipments to the U.S. grew by +22% y-o-y, while the American purchases from Germany increased twofold. Chile saw an 8%-growth of exports to the U.S.

In value terms, the largest MDF suppliers to the U.S. were Chile ($252M), Canada ($245M) and Germany ($203M), with a combined 66% share of total imports.

These countries were followed by China, Brazil, Austria, Viet Nam, New Zealand, Argentina, Turkey and Mexico, which together accounted for a further 26%.

The average MDF import price stood at $462 per cubic meter in 2020, with a decrease of -20.8% against the previous year. There were significant differences in the average prices amongst the major supplying countries. In 2020, the country with the highest price was Austria ($644 per cubic meter), while the price for Turkey ($265 per cubic meter) was amongst the lowest. In 2020, the most notable price growth was attained by Chile, while the prices for the other major suppliers experienced a decline.

Source: IndexBox Platform

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Vietnam Drives Out China from the American Wooden Kitchen Furniture Market

IndexBox has just published a new report: ‘U.S. – Wooden Furniture Of A Kind Used In The Kitchen – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

In 2020, American imports of wooden furniture for kitchens soared by +22% y-o-y to 52M units or $1.9B in value terms. Supplies from Vietnam and Malaysia offset the dramatic drop in imports from China after the tariffs on Chinese products increased. Among other countries, Indonesia, Taiwan, Thailand and Mexico saw the highest spikes in wooden kitchen furniture exports to the U.S. The average wooden kitchen furniture import price dropped by -18.1% against the previous year. 

American Imports of Wooden Kitchen Furniture by Country

In 2020, the amount of wooden furniture for kitchens imported into the U.S. surged to 52M units, increasing by 22% compared with 2019. In value terms, wooden kitchen furniture imports totaled $1.9B in 2020 (IndexBox estimates).

In 2020, Vietnam drove out China from the leading position in the American imports and became the largest exporter of wood kitchen furniture to the U.S. Over the last year, the supplies from Vietnam rose from $224M to $487M. Malaysia occupied second place in the list of top suppliers to America, boosting its exports to the U.S. from $148M in 2019 to $415M in 2020. Indonesia recorded the highest spike in kitchen furniture exports to the U.S. In 2020, Indonesia ramped up the supplies from $13M to $103M. Among other countries, Taiwan, Thailand and Mexico featured the most prominent export growths of kitchen furniture to the U.S. The purchases from China fall dramatically from $831M to $132M owing to raising tariffs on Chinese imports.

Vietnam (16M units), Malaysia (11M units) and Canada (6.1M units) were the main suppliers of wooden kitchen furniture imports to the U.S., with a combined 64% share of total imports. China, Indonesia, Mexico, Italy, Taiwan and Thailand lagged somewhat behind, together comprising a further 27%.

In value terms, the largest wooden kitchen furniture suppliers to the U.S. were Vietnam ($487M), Malaysia ($415M) and Canada ($301M), together comprising 62% of total imports. China, Italy, Indonesia, Mexico, Thailand and Taiwan lagged somewhat behind, together comprising a further 28%.

The average wooden kitchen furniture import price stood at $37 per unit in 2020, with a decrease of -18.1% against the previous year. Prices varied noticeably by the country of origin; the country with the highest price was Italy, while the price for Taiwan was amongst the lowest.

Source: IndexBox Platform