Manufacturing applications to offer brightest prospects
Demand for wood panels in the US is expected to decline about one percent per annum through 2010 to 62 billion square feet, as measured on a 3/8-inch basis. While construction applications, the major use for wood panels, will be adversely affected by a softening in new housing construction, wood panels will enjoy brighter prospects in manufacturing applications. Demand in the latter will increase one-half of one percent per year through 2010 to roughly 21 billion square feet. Wood panels will benefit from more rapid growth in domestic manufacturing activity compared to that of the 2000- 2005 period, which included the 2001 economic recession and a further year of fitful economic growth. Among manufacturing markets, transportation equipment and material handling applications will lead gains, helping to offset weakness in demand for wood panels used in furniture and in engineered wood products, which will be constrained by the residential construction slowdown.
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Shift toward specialty wood panels to help raise prices
Measured by dollar value, wood panel demand is forecast to decline more than one percent per annum through 2010 to $16 billion. Declines in demand volume will adversely affect value growth. In addition, schedule capacity increases and weakening demand from the construction market will serve to limit unit price increases for wood panel products. Growth in the average price for wood panels will be helped, however, by a shift in product mix toward more expensive specialty panels. Net imports will continue to be an important source of supply for the US market, accounting for about one-third of US demand in 2010.
Nonstructural panels to fare better than structural
While volume demand for both nonstructural panels and structural panels are projected to fall through 2010, the decline for nonstructural panels will be less severe. The brighter outlook for the manufacturing market will support demand for nonstructural panels, which have relatively higher use in manufacturing applications. Demand for both structural and nonstructural wood panels will also be buoyed by product developments aimed at improving quality and reducing costs. These developments will be especially important at limiting the effects of competition from alternative, nonwood materials. Among the various nonstructural panel products, hardwood plywood and medium density fiberboard (MDF) will enjoy the best opportunities through 2010. Each product will benefit from demand in the furniture market. Although shipments of wood furniture from the US are expected to decline through 2010, production from US producers will increasingly be focused on products tailored to higher-end markets, which will benefit hardwood plywood and MDF at the expense of particleboard.