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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

MDF

The EU MDF Market to Post Moderate But Steady Growth

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

The revenue of the MDF market in the European Union amounted to $5.3B in 2018. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). The market value increased at an average annual rate of +5.5% over the period from 2013 to 2018; the trend pattern remained consistent, with only minor fluctuations in certain years. The pace of growth appeared the most rapid in 2018 when the market value increased by 12% y-o-y. In that year, the market attained its peak level and is likely to continue its growth in the immediate term.

Consumption by Country

Poland (3.3M cubic meters) constituted the country with the largest volume of MDF consumption, accounting for 28% of total volume. Moreover, MDF consumption in Poland exceeded the figures recorded by the second-largest consumer, Italy (1.3M cubic meters), threefold. The third position in this ranking was occupied by the UK (1.3M cubic meters), with a 11% share.

In Poland, MDF consumption expanded at an average annual rate of +6.6% over the period from 2013-2018. In the other countries, the average annual rates were as follows: Italy (+7.5% per year) and the UK (+2.7% per year).

In value terms, the largest MDF markets in the European Union were Poland ($1.3B), Italy ($713M) and the UK ($657M), together accounting for 50% of the total market. France, Spain, Germany, the Netherlands, Romania, Portugal, Austria, Sweden and Hungary lagged somewhat behind, together accounting for a further 39%.

In 2018, the highest levels of MDF per capita consumption was registered in Poland (87 cubic meters per 1000 persons), followed by Portugal (38 cubic meters per 1000 persons), Romania (29 cubic meters per 1000 persons) and Austria (28 cubic meters per 1000 persons), while the world average per capita consumption of MDF was estimated at 23 cubic meters per 1000 persons.

Market Forecast to 2030

Driven by increasing demand for MDF in the European Union, the market is expected to continue an upward consumption trend over the next decade. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +2.4% for the period from 2018 to 2030, which is projected to bring the market volume to 16M cubic meters by the end of 2030.

Production in the EU

The volume of MDF production totaled 13M cubic meters in 2018, remaining constant against the previous year. The total output increased at an average annual rate of +2.7% from 2013 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being recorded throughout the analyzed period. The pace of growth appeared the most rapid in 2015 with an increase of 8.4% y-o-y. The volume of MDF production peaked at 13M cubic meters in 2017, leveling off in the following year.

Production by Country

Poland (3.6M cubic meters) remains the largest MDF producing country in the European Union, accounting for 28% of total volume. Moreover, MDF production in Poland exceeded the figures recorded by the second-largest producer, Spain (1.5M cubic meters), twofold. The third position in this ranking was occupied by Germany (1.5M cubic meters), with a 11% share.

In Poland, MDF production expanded at an average annual rate of +4.8% over the period from 2013-2018. In Spain, the average annual rates stood at +6.3% per year, while in Germany, the volume of production practically mirrored its outset level of 2013.

Exports in the EU

In 2018, the amount of MDF exported in the European Union amounted to 6.5M cubic meters, remaining relatively unchanged against the previous year. Overall, MDF exports, however, continue to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2016 when exports increased by 3.3% y-o-y. In that year, MDF exports attained their peak of 6.7M cubic meters. From 2017 to 2018, the growth of mdf exports failed to regain its momentum. In value terms, MDF exports amounted to $3.3B (IndexBox estimates) in 2018.

Exports by Country

In 2018, Germany (1.5M cubic meters), distantly followed by Belgium (1,012K cubic meters), Poland (682K cubic meters), Spain (643K cubic meters), France (436K cubic meters), Austria (404K cubic meters) and Ireland (322K cubic meters) were the major exporters of MDF , together comprising 77% of total exports. Romania (261K cubic meters), Portugal (259K cubic meters), Italy (218K cubic meters), Hungary (185K cubic meters) and Slovenia (136K cubic meters) followed a long way behind the leaders.

From 2013 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by France, while exports for the other leaders experienced more modest paces of growth.

In value terms, the largest MDF supplying countries in the European Union were Germany ($854M), Belgium ($565M) and Austria ($317M), with a combined 53% share of total exports. These countries were followed by Spain, Poland, France, Ireland, Italy, Portugal, Romania, Hungary and Slovenia, which together accounted for a further 39%.

Export Prices by Country

The MDF export price in the European Union stood at $503 per cubic meter in 2018, picking up by 7% against the previous year. Over the period under review, the export prices for MDF reached their maximum in 2014; however, from 2015 to 2018, export prices remained at a lower figure.

Prices varied noticeably by the country of origin; the country with the highest price was Austria ($784 per cubic meter), while Romania ($292 per cubic meter) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Italy, while the other leaders experienced more modest paces of growth.

Imports in the EU

In 2018, approx. 5.3M cubic meters of MDF were imported in the European Union; going up by 5.3% against the previous year. The total import volume increased at an average annual rate of +5.2% from 2013 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being observed throughout the analyzed period. The growth pace was the most rapid in 2017 with an increase of 8.6% against the previous year. The volume of imports peaked in 2018 and are expected to retain its growth in the immediate term. In value terms, MDF imports stood at $2.6B (IndexBox estimates) in 2018.

Imports by Country

The countries with the highest levels of MDF imports in 2018 were Italy (599K cubic meters), the UK (570K cubic meters), the Netherlands (469K cubic meters), Germany (463K cubic meters), France (433K cubic meters), Poland (411K cubic meters), Belgium (335K cubic meters), Portugal (269K cubic meters), Spain (249K cubic meters), Sweden (212K cubic meters) and Romania (201K cubic meters), together acoounting for 80% of total import.

From 2013 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Poland, while imports for the other leaders experienced more modest paces of growth.

In value terms, the largest MDF importing markets in the European Union were the UK ($338M), Germany ($269M) and Italy ($255M), with a combined 33% share of total imports. France, the Netherlands, Spain, Poland, Belgium, Sweden, Portugal, Romania and Austria lagged somewhat behind, together accounting for a further 49%.

Import Prices by Country

The MDF import price in the European Union stood at $492 per cubic meter in 2018, rising by 4.9% against the previous year. Over the period under review, the mdf import price, however, continues to indicate a slight curtailment.

Prices varied noticeably by the country of destination; the country with the highest price was the UK ($593 per cubic meter), while Poland ($320 per cubic meter) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Spain, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform