The market for MDF is keeping UK distributors and merchants busy fulfilling orders – and ensuring they have the supply.
At the same time that demand is strong, supply in the UK is tight because Kronospan’s Chirk plant is still not running at full capacity following the explosion at the factory on August 12 last year.
Distributors are spreading their nets wider around the UK manufacturers in order to buy sufficient volume and where they’re not regular customers they’re having to wait longer for product.
One contact is facing a six-week lead time from a manufacturer that’s not a regular supplier.
“We’ve had problems when we’ve run out of stock of standard materials. It’s frustrating when demand is good,” he said.
Another contact said his regular MDF supplier was being cautious with order sizes and was more like the rationing officer than the sales team at the moment.
“They’re more into rationing supply than they are into promoting sales,” he said.
Some in the trade have benefited as they’ve received new customers, at least temporarily, but it’s not necessarily something to celebrate.
“It’s giving more volume to everyone else but that’s not how we want to do it,” said one contact.
“We want to sell more and be more profitable by our own merit and not through someone being down.”
Although the supply issues are apparent nobody described the situation as a shortage. “It’s not as bad as to create shortages. I don’t think anyone [among customers] has had to stop production because of supply,” said one contact.
The market has also been topped up by Kronospan and others bringing in more MDF from Europe. This is evident in the Timber Trade Federation’s latest trade statistics which show that during January and February MDF imports were up 48.2% – to 131,000m3 – compared with the same period last year.
In a statement to TTJ, Kronospan said it had to restrict the use of one of its two MDF lines since last summer because of power restrictions. The company expects the second line to “come back on stream in the immediate future”.
“The problem was not the press itself, but the lack of ability to obtain enough external supply of electricity due to weak UK power line infrastructure,” said a spokesperson.
“Nevertheless, with the help of other Kronospan factories we were able to maintain supply to customers at the same volume of MDF in the UK market as during the previous year. While this did not come without logistical issues, it was a great demonstration of Kronospan’s resilience.”
The spokesperson continued: “The UK market was not deprived of supply, but it is growing strongly, which is excellent news, bringing its own challenges, on which we are working hard with investment projects amounting to well over £200m over the next three years.”
Although supply has been tight one merchant said his business was on target to grow its MDF sales by 12% this year and all contacts reported good demand.
“The market is strong – it’s not at the very best, but it’s not bad either,” one contact told TTJ.
Demand for all specifications is keeping traders happy and several contacts commented on the strong and continuing growth in demand for MDF mouldings.
“Housebuilders are moving to MDF mouldings as a given for new building but I see it happening in the RMI market as well,” said one merchant.
Another predicted the trend would continue, resulting in “an ongoing decline for machined softwood”.
There was also a continuing transition from standard grade to MR in the merchant sector.
“It’s exactly the same evolution as we’ve had in chipboard over the past 20 years,” said another merchant.
“It went from chipboard to a flooring grade to MR flooring grade chipboard, then 100% MR and then a thicker board. Now 22mm board is the generic T&G flooring grade chipboard.
“That’s good,” he continued. “Upselling is exactly what the industry should be doing.” One distributor also noted growing demand and healthy sales levels for melamine-faced board but supply of this too was similarly tight at present.
Demand for MDF in general is being generated from the traditional market areas – shopfitting, RMI, jobbing builders, furniture and new build – the latter requiring MDF not only for mouldings, but also staircases.
Over the last month or so manufacturers have raised prices by 5%, not just in response to tight supply but also to cover the increased raw material costs including veneers, melamines and adhesives.
Despite what one merchant described as the “slightly chaotic mix” of tight supply, the general election, and the uncertainty of the Brexit negotiations, the sector seems to expect business to continue in the same tone for the remainder of the year.
The days of the silly summer season, when prices were discounted to move volume, seem to be well and truly in the past and what uncertainty does exist, traders seem to be taking in their stride.
“The Brexit negotiations will have an impact, either good or bad. It’s impossible to predict what’s going to happen because noone knows where the exchange rate is going to be in six months’ time. We have to live with it and try to do the best we can,” said one contact. “We can make all the plans we want but it probably won’t be very useful.” And despite the uncertainty, he remained optimistic.
“I think the industry is coping with what the government and the country is doing in terms of the EU negotiations and I think we need to be optimistic. The economy is still strong and the market is still there,” he said.
“We’ve heard different forecasts about where the pound will be at the end of the year. We just have to go day by day and focus on our business.”
Another positive, said a merchant, was the healthy level of housebuilding activity and the government’s plans to build more houses. He did, however, acknowledge that if the current tight supply continued it could limit the market.
“Because of the constraints on volume the next six months will be about maximising market share rather than developing into new sectors,” said a merchant.
The growing demand for MDF was positive but he cautioned that unless a new supplier entered the market, traders would struggle to meet that demand.
A distributor could have been speaking for the sector when he summed it up: “As long as you can get product, the MDF market is good.”
