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According to information provided to the Composite Panel Association (CPA) by members, 2007 was a challenging year. Shipments of particleboard by volume were off 14 percent for U.S. producers and off 11 percent for producers in Canada from 2006.

Shipments of hardboard fell 12 percent from the prior year for the United States and Canada combined. Shipments of MDF fared better. U.S. producers reported an increase of 1 percent from 2006, and producers in Canada reported a 2 percent gain in volume of shipments.

This is according to CPA vice president, communication and marketing, Curt Alt.

“While MDF and particleboard service many of the same market segments, MDF markets are somewhat broader,” Alt explains. “We believe MDF’s broader applications have helped MDF shipment numbers hold up during a difficult time while demand for other panel products has declined.

“Profitability was an even greater challenge than demand as producers faced significant increases in production costs. Cost increases for the three main ingredients needed to produce panels (fiber, resins and energy) were noteworthy. Most significant of these were resin costs. Fiber costs as well as availability are of concern to U.S. and Canadian panel producers. Depending on local availability, fiber costs as much as doubled from the prior year.”

The CPA, founded in 1960, represents the North American composite panel industry on technical, regulatory, quality assurance and product acceptance issues.

North of the border, Canadian producers had similar challenges

“CPA members in Canada have all these concerns plus the effects of a rising currency against the U.S. dollar,” Alt says. “The Loonie ran up rapidly from about 70 cents/U.S. dollar to parity with the U.S. dollar. This has the effect of driving revenues down by 30 percent on Canadian producers because their costs are paid in Canadian dollars while their sales are principally in U.S. dollars, since much of their production goes to U.S. markets.”

Exchange rates, soft markets and lower prices have been cited as reasons behind mill closures in Canada, he says.

“Columbia Forest Products announced in September 2007 the particleboard facility at Hearst, Ontario, would close in November,” Alt says. “In late October CANPAR Industries announced the closure of the particleboard mill at Grand Forks, British Colombia, in December. The FibraTech mill at Atikokan, Ontario, and the Canadian Forest Products hardboard mill at Vancouver, British Colombia, also closed in 2007.

Alt reports that 2008 promises to be another challenging year for CPA members.

“Our member companies will continue to face the double whammy of decreased demand coupled with increased costs,” he says. “On the cost side, companies are seeing huge increases in both raw material costs [fiber and resin] and production costs [environmental regulations, energy, fuel and transportation, etc.

“On the demand side, the continued housing downturn has translated into decreased demand in the major markets served by our members. We see the housing crisis reaching bottom this year with the recovery beginning in 2009 and picking up speed in 2010. Members will be challenged to seek technological and other production efficiencies to get them through until the housing situation turns around.”