Volume 46, Issue 4 - May 2007

Cutting It Thin 
MDF Producers Search for New Sources of Wood Fiber

All the reports say housing starts have plummeted. Normally, when demand slows up, you’d expect building products to become more readily available. Yet, as fewer houses are being built, the composite panel product medium-density fiberboard (MDF) has become more scarce. It’s enough to leave number crunchers scratching their head and wondering what the heck is going on.

In reality, the correlation between falling housing starts and the scarcity in MDF makes a lot of sense. MDF producers require wood fiber to make their product. The wood fiber is a byproduct that comes from sawmills after they cut wood logs into lumber. Without the fiber, MDF producers are in a difficult position.

“The extremely low prices for lumber have limited its products. This has created a shortage of residuals for use in the manufacturing of MDF,” says Bryan Wilson, marketing and sales manager, industrial panels, for Temple-Inland, an MDF producer in Diboll, Texas.

Without the raw material, MDF producers are taking steps to find other solutions. So far, they’re not having a lot of success. But the industry remains hopeful that changes in the housing market and weather could boost supply.

What is MDF?
Medium-density fiberboard (MDF) is widely used in the manufacture of furniture, cabinets, door parts, mouldings, millwork and laminate flooring, according to the Composite Panel Association. MDF panels are manufactured in a variety of dimensions and densities, providing the opportunity to design the end product with the specific MDF needed. 
MDF is a composite panel product typically consisting of cellulosic fibers combined with a synthetic resin or other suitable bonding system and joined together under heat and pressure. Additives may be introduced during manufacturing to impart additional characteristics. The surface of MDF is flat, smooth, uniform, dense and free of knots and grain patterns. 

The Raw Reason
If you want to know why MDF is becoming difficult to find, look no further than the sawmills, if you can still find them. With softening demand a number of mills are either slowing down or closing altogether.

“Here at home, part of the problem stems from the precipitous drop in lumber prices resulting in curtailment of lumber production, the source of much of our industry’s raw material in the form of recovered planer shavings, sawdust and chips,” says Will Warberg, sales and marketing manager of Plum Creek MDF in Columbia Falls, Mont., an MDF producer.

One MDF industry professional with another North American MDF supplier, who wishes to remain anonymous, agrees with Warberg. 

“There have been many curtailments and closures at sawmills and plywood mills,” the source says. “Since they are the primary source of raw material (chips, planer shavings, sawdust and plytrim) for MDF plants, fiber is in short supply.”

Wilson provides a different take.

“Current demand/capacity ratios for the MDF industry are in the low 80-percent range. This range doesn’t normally equate to a tight market,” he says. “However, due to raw material (i.e. chips, shavings, etc.) shortages most mills are unable to operate at full capacity, and this has resulted in limited board supplies in certain markets at certain times.”

“In addition, demand for thin MDF has exploded since the beginning of the year,” Wilson says.

Wayne Schwerin, sales manager for Pan Pacific Products in Broken Bow, Okla., says his company hasn’t seen an increased demand for MDF from its present or new customers. He believes that the attention on the shortage of low-cost raw materials has precipitated a potential tightening.

“The demand will cause the market to respond and most mills have short production schedules due to lack of order files, not because of raw material shortages,” Schwerin says. “There are raw materials available, just not at the price most mills are willing to pay. If the market allowed price increases, the mills would be able to justify higher raw material cost,” adding that he has seen mills lower prices in the last couple of months, not increase them. 

“Some specialty products are able to command an increase but not the conventional MDF market,” Schwerin says.

Fierce Competition 
Exactly who is competing for wood fiber? A lot of people.

Warberg says the emerging market for green energy will take an even bigger portion of the fiber available in the years to come. He says that new green uses include wood-fired boilers to generate electricity, wood pellet furnaces to heat homes and public buildings, and most recently, wood-based ethanol production to displace imported oil.

The anonymous source agrees. “Competitors for this fiber, such as paper mills cogeneration plants and pellet plants, are also vying for more of our fiber—types of which they don’t normally use,” he says.“

And, of course, there are still the other well-established uses of wood fiber including pulp and paper and numerous other industrial applications,” Warberg says.

Because of the scarcity of MDF, some producers are increasing their prices.

Several things are pushing prices up.

“The first point is that with decreased supply of fiber, MDF producers are bidding against each other and against other industries for less fiber,” he says. “In addition to more bidders, MDF producers are also bidding for fiber that is further away to try to fill the void created by reduced sawmill and plywood mill production closer to them.”

He says the result is higher prices for the fiber and higher freight costs. The other pressure point is that MDF plants are expensive and have high fixed costs, and lost production time means there is less MDF board footage to help maintain the high cost of running an operation. 

“Cost is also driven up by the type of fiber that remains available. During the winter months sawmills run their boiler off of dry shavings because it burns better,” the anonymous source says. “That leaves more sawdust which is wet. MDF plants spend their money on energy drying the sawdust down to useable moisture contents. The fiber length of sawdust is also not as desirable as planer shavings.”

Schwerin agrees that not all MDF price increases should be attributed to a decrease in raw material.

“We have not increased prices due to supply decreases. Raw material and energy price increases have caused a small price increase in the beginning of 2007, but we do not expect to be able to increase prices again anytime soon,” Schwerin says.

The Needle in the Haystack
With so much competition for wood fiber, what are MDF producers doing to combat this problem? The answer: looking for alternative sources.

Warberg says a tightening in the MDF market forces his company to reach further for alternative supplies. 

“[These supplies] tend to be more costly in terms of the transportation costs—not to mention the price impact from having to bid against others shopping for the same fiber,” he says. “Additionally, we and other producers are continually improving our ability to conserve raw material without compromising the product quality our customers require.”

He sees more preservation of materials down the road.

“In the future, more of our industry will look for alternative sources of raw material including extraction of fiber from the waste stream in the form of construction remnants, recycled furniture, discarded pallets/packaging material, landscaping debris and so forth,” Warberg says.

Another MDF producer has expanded the wood specie types that it is running in its plants. “We have not typically utilized large quantities due to potential affects on quality, product speeds and resin usage. We also use more urban wood, as much as we are able to clean,” the producer says.

While MDF manufacturers search for alternative sources of wood fiber, the issue of tightening in MDF supply remains and some markets are seeing price increases.

“As in other parts of the world, prices will have to rise to keep the particleboard and MDF industry a viable competitor for the available wood supply,” says Warberg. “Even though MDF consumption fell with the housing starts drop early last fall, we are now seeing seasonal demand strengthening—particularly from non-housing sectors.”

Is the End in Sight?
How long will this decreased supply of wood fiber continue? 

The anonymous source says he doesn’t believe the shortage is serious at this point.

“Every day closer to warmer weather helps reduce the likely severity of the shortage of fiber. As it gets warmer, sawmills can burn a wetter mix in their boilers and pellet makers aren’t buying as much fiber because people aren’t heating their homes,” he says. “However, if new home construction remains low, log costs remain high, lumber and plywood prices remain low, and demand increases, there could be a more severe shortage and higher prices as mills bid for more fiber to fill demand.”

Schwerin isn’t convinced there is a shortage. “I am not sold that there is a shortage, but if so, it will be eliminated when the mills having raw material shortages are able to run full production schedules,” he says. 

Others believe raw material will become more abundant as the housing market recovers.

“[The tightened MDF supply will continue] until construction activity and lumber productions rebound—likely into the fourth quarter or beyond,” Warberg says. 

And MDF Product Manufacturers Say …
While some of the medium-density fiberboard (MDF) producers are on the fence about whether there is a shortage or not, MDF product manufacturers say they have felt a tightening.

Tom Williams Jr. is president of Yuba River Moulding and Millwork Inc. in Yuba City, Calif., and his company recently began manufacturing MDF mouldings.

He has seen a shortage, but he says the communication with his supplier has been open about the issue. He attributes the tightening of MDF to better demand and reduced supply of raw material.

Craig Young, sales manager, TLC Mouldings in Willachoochee, Ga., also attributes a tightening in the MDF supply to a shortage of raw fiber.

“The main issue is that there is decreased capacity in the MDF supply side due to a shortage of raw fiber due to curtailments in the sawmill side. Plus there is increased demand for fiber in others areas, such as co-gen, bio-mass, paper and particleboard,” Young says.

Young says the communication is ongoing with mills, and he says there seems to be a swing towards trying to increase board prices, but “until recently, there have been some mills offering block deals to move materials.”


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