The thinboard market in the UK has been rocked by a series of developments over recent months. Not least of these has been the decision by the Sonae Group to close its Euro Decorative Boards plant at Peterlee in County Durham from the middle of March. The move has coincided with a decision at Kronospan to remove the Kronolac lacquer line at its Chirk facility in North Wales and ship it to the group’s sister facility in Poland.

Euro Decorative Boards had been producing painted, cut-to-size hardboard using material brought in from Spain. A Sonae spokesperson in the UK said the group had decided to close the business because of ‘ongoing losses’ and following ‘abortive attempts to sell the company’. The closure demonstrated that, in many instances, UK industry was ‘struggling with costs that can’t be sustained’, he added.

Raw, white painted and woodgrain sheets of hardboard would continue to be brought in from Spain because it was a more cost-effective route. The spokesperson commented: ‘We are endeavouring to retain continuity and enquiries are proceeding. The boards [from Spain] will not be cut-to-size at the moment, but that is something Sonae is considering.’

Move to Poland

According to a senior spokesperson within Kronospan, the Kronolac plant at Chirk was still fulfilling some orders but would probably be moved to Poland by the summer. Lacquered board would then be imported from the group’s Polish operation so, he said, UK customers would see no adverse impact on the continuity of ordering or supply.

The decision to relocate the plant was taken in the light of the poor ratio between production costs and financial returns from the lacquer line operation at Chirk, which is thought to have a capacity of around 14 million m² per year. ‘Economies of scale’ would result from focusing lacquered board production in Poland, he said.

The market has had a mixed reaction to the closure of the Euro Decorative Boards plant, which was a leading UK supplier of painted boards, for example for the backs of furniture fittings. There have been complaints that the decision to shut the business was put into effect with very little notice, although Sonae disputes this. However, there were suggestions from other quarters of the trade that the dust on this closure had already begun to settle and that Euro Decorative Board’s production was ‘well on the way to being soaked up’.

One contact commented: ‘The closure will be of benefit to other fringe suppliers but I don’t see any great long-term effect from it. It may cause some firming in prices but, with fears of a slowdown in the US and the Far East, there is enough slack in the market place to take it up.’

There is no doubt that the closure has resulted in good knock-on business for some other producers of painted board, notably those in Scandinavia and Germany. A spokesperson for one told TTJ: ‘We are very busy. Our prices rose at the start of the year by 3-4%. If the current demand continues, we would certainly be looking for another 3-4% by the end of June.’ He pointed to ‘a certain amount of panic’ among painted board users as they tried to cover their needs from sources they had not been accustomed to using.

He added: ‘If we don’t get price increases on hardboard in the next three months, we want our backsides kicked.’

Change of focus

For the first time in a long while, developments in the UK hardboard sector have not been focused on the now closed Imperial Board Products Ltd (IBP) plant in South Wales. With the landlord’s bailiff said to be in negotiations with ‘several parties’, it seems likely that the UK’s sole wet process high density fibreboard plant will be sold and shipped overseas.

Speaking to TTJ this week, former IBP managing director Huw Jones confirmed that his own interest in the plant was effectively at an end. Forced to call in receivers last May, he had attempted to win financial backing for a plan to establish ‘a paint shop operation rather than a full-blown hardboard facility’ at Ebbw Vale. But he said: ‘The opportunities are not there that were there a year ago. The profitability is not there, and it would be doubly difficult for any new venture starting up.’

&#8220Prices could go higher, but the summer is coming up when manufacturing costs tend to go down”

Liquidation process

The affairs of IBP are still subject to a liquidation process, while the impact of the South Wales operation is said to be reverberating in certain corners of the thinboard trade. For example, this was claimed to be one reason behind the decision to reassess and ultimately suspend hardboard production at the AS Bolderaja mill in Latvia in November last year.

The Latvian mill had been selling around two-thirds of its exports – equivalent to some 4.5 million m² per year – into the UK market. However, while there was no difficulty in finding markets for the product, it was proving impossible to increase selling prices to a level that would push the plant into profitability. Problems had been exacerbated by the soaring cost of Bolderaja’s main source of energy, namely heavy oil from Russia. According to the mill, there seemed little prospect of this price falling in the near future; the mill itself was over 30 years old and did not justify the massive investment required to change the fuel consumed.

It appears that the closure of IBP and the suspension of hardboard production activities at Bolderaja have to take some credit for an upward movement in hardboard prices. However, the improvement has been insufficient to tempt the Latvian mill back into hardboard production and a decision on the future of this activity at Bolderaja is due to be taken towards the end of this month. The suspicion at present is that hardboard production will end at the mill, although it was emphasised that no firm decision had yet been reached.

The Latvian mill has confirmed that, whatever the decision on its hardboard activities, it will not only continue to produce chipboard but will also invest in this area; the mill sells some 100,000m³ per year in raw form, as well as melamine faced, worktops and furniture components. In addition, the mill will continue with the further processing of hardboard – ie painting and cutting to size – under the Griva B banner.

Positive effect

The suspension of hardboard output at Bolderaja has had a positive effect on other producers, with one contact suggesting that his company had been approached by several large importers for standard 4ft board. Raw board prices are said to have improved slightly as a result of the production declines, but there are still reports of pressure from consumers to take prices lower. As one expert put it: ‘The price increases on hardboard appear to be quite selective. It all seems to depend on who is busy and what is being bought.’

Another view was that a single buyer in the market had created the impression among some mills – notably in the Baltics – that demand was better than it was. He reckoned hardboard prices had risen by on average 10% since the end of 2000 but the market remained ‘flat’. He added: ‘Prices could go higher, but summer is coming and manufacturing costs tend to go down.’

The higher prices had opened up a few doors for overseas manufacturers of hardboard wanting to export to Britain, although at least one contact said that sales into the UK from the company he represented had been effectively ruled out by anti-dumping levies.

Loss of supply sources and some suggestion of higher prices have failed to lift the general air of depression surrounding the hardboard market. As one contact complained: ‘As soon as you come on to the subject of hardboard, people say it’s just hardboard and they’ll buy the cheapest. It is a lot of work for nothing.’ Another said: ‘Hardboard is on the way out – thin MDF will take it out. I don’t think the demand will be there in future except for speciality uses. The commodity items are just not competitive.’

While the hardboard market has witnessed some major developments in the first quarter of the year, the softboard market continues to bowl along in relatively unspectacular fashion. The natural softboard market was described as simply ‘ticking over’ while the first three months of this year were generally stable in terms of prices for expansion joint filler material. The bright spot surrounds the continuing improvement in demand for bitumen impregnated softboard used as sheathing in the timber frame construction market, which has been well-established in Scotland for many years but which is now also making significant inroads into the housing market south of the border.

Demand for the product had been invigorated by moves to comply with Part L regulations dealing with thermal performance due to come into effect from May this year. ‘The product has been widely used in Scandinavia for some time and the UK market is beginning to recognise it as the solution – our sales have trebled over the last few months,’ said one contact.

Softboard demand for notice boards has been adversely affected, said one supplier, by the continuing lack of money in the UK education sector – a major end user. Many schools are continuing to buy but are opting for cheaper materials.

Meanwhile, there is reported to be ‘chaos’ on the west coast of the US as a result of the well-publicised energy crisis. Some softboard producers have curtailed production, with the result that those continuing in operation are enjoying much higher levels of demand.