In the opening weeks of the year, chipboard experts were universally and unequivocally optimistic about market prospects for 2014. And following particularly vibrant sales in March, many now appear to be even more bullish about what this year holds in store. One domestic producer saw no reason to alter his early-year forecast of steady growth for the chipboard market in 2014, adding that he expected sales volumes to climb by 5-10% when compared to last year. Volumes could be expected to increase by "a double-digit percentage", another said. "I would be disappointed if they didn’t. It’s a good picture."

Once again, reports confirm healthy demand from shop, kitchen and bathroom fitters. One producer pointed to a "very strong" start to 2014 in terms of demand for shopfitting, with the major retail chains providing particular impetus; and "very large levels of activity in the student accommodation sector", driven at least in part by the need to meet the higher expectations of students from overseas. Pointing to a general strength in demand, another chipboard contact added: "There are shortages in some qualities and worktop manufacturers are trying to doublesource as the lead time is getting longer and they need to secure supply of board."

However, a domestic chipboard producer spoke of a "mixed" opening quarter to 2014 for the construction and newbuild sector, with the wet weather contributing to a slightly slower market pace than in the final months of 2013 – although one that was still more lively than in the early part of last year. On the upside, he said, improving weather conditions and an end to weather-related delays "could mean a busy period ahead of us"; there were already signs of an increase in order intake, he noted.

And while a fellow producer also acknowledged that the heavy rains had hampered building work, the return of more placid weather conditions led to an upturn in construction-related chipboard orders in March. "It was a particularly busy month," he told TTJ. "And there is a bit of catch-up still to be done." The wet weather also pushed up chipboard production costs, a producer added. In this context, he said, the timber bill was also continuing to mount while resin costs were slightly higher when compared to the start of 2014. Another producer also noted "ongoing pressure" on timber and other costs.

Boost from housing market

The housing market renaissance is certainly playing its part in fuelling confidence in the chipboard sector. In its latest financial results analysis, Norbord pointed out that UK housing starts increased by 30% last year, with government stimulus initiatives to support home buyers expected to continue to help drive the market. As confirmed only recently, more than 17,000 people have availed themselves of the government’s Help to Buy scheme, mostly first-time buyers.

Against this backdrop of healthy chipboard demand, producers have been adopting several tactics in a bid to keep the UK market supplied.

There is evidence of product lines having been rationalised in ways that offer producers the highest levels of efficiency and the best returns. Furthermore, some of the recent and planned investments in UK chipboard facilities will have the effect of increasing production capacities. And at least one domestic producer was prepared to say that he had bought in chipboard from the Continent to supplement his production on these shores. Asked for how long he expected to continue to import in this way, he said: "We will do it for as long as it takes. We will also continue to invest in our own lines to make more. The market is tight and we are trying to fill that shortage."

Those "opportunistic" buyers who have consistently declined to align themselves with a supply source "now have a problem", he added. Another producer suggested an increasing number of purchasers had been looking to tie themselves in with a chipboard source in order to cement continuity and security of supply.

Prices rises

Immediately following some double-digit chipboard price increases in the early weeks of the year, expectations were of further hikes in the not-too-distant future. And so it has proved, with one producer confirming that his business would be seeking an additional 3-5% for its melamine-faced chipboard (MFC) with effect from the start of April as well as increases of up to 10% on raw board at some point during April and May. And his counterpart at another producer operation confirmed that a raw board increase of 8-10% would be implemented at the beginning of April, with 5-8% to be added to MFC price tags a couple of weeks later. The latter also noted that an increase of 3-4% had been applied to T&G several weeks ago while worktop customers would be paying typically 3-5% more as their individual payment scales came up for review.

News that prices would rise again in April was given as another reason for the healthy business levels witnessed in March as buyers looked to place orders ahead of the increases. The broad-based upturn in UK demand for chipboard has continued to apply pressure on