International Wood Markets Group released the seventh edition of its U.S Moulding Market Outlook: 2012- 2016, noting that “after enduring four years of declining demand of epic proportions, the resultant consolidation among North American and offshore moulding producers has left the industry with fewer but, on average, much larger producers.”

“Up until recently, it was moulding distributors who had been the ones with the real negotiating power where they had the option of numerous producers that they could turn to for supply,” says Peter Butzelaar, the lead author of the report. “Today this option no longer exists, as there is a limited number of major offshore and domestic producers remaining and they are now in the driver’s seat and are using their new power to set the market tone and raise prices”.

According to the report, in the past, having access to the customers was the key for success in moulding distribution. It says that going forward, success for distributors will be more related to having access to reliable supply of mouldings, as they are expected to be more constrained. And for producers, success will be more related to having access to a steady and longer term supply of raw material inputs. In either case, whoever has the supply to match with growing demand will be best situated to capture the benefits from rising prices.

The research and market investigations were conducted over a six-month period and included modeling and forecasting. Discussions were held with major industry players in North America and the Southern Hemisphere.

“With tight supply and the expected double-digit growth in demand, the potential of a ‘super-cycle’ emerging out of the moulding sector within a few years is definitely a viable possibility,” says Butzelaar.

Some of the other implications related to a rebound in moulding demand that is forecasted in the report include:

• Moulding demand in 2011 was split between new construction and repair and remodeling at around 40/60. However; as the housing recovery gains momentum, Wood Markets is forecasting the split to move to 50/50 by 2014 and then new residential construction will overtake repair and remodeling in 2015;

• The North American supply of appearance pine material (shop and better lumber, blocks and blanks) is forecast to rise by 9.0 percent in 2012 and, by 2016, supply is forecast to increase by more than three times this to keep up with demand from North American moulding and millwork producers. Much of this growth should originate from Southern Hemisphere imports;

• To keep pace with forecasted accelerating moulding demand, finished moulding imports (solid lineal, finger-joint and MDF) are poised to play a larger role, increasing their dominant market share by another 5 percent of U.S. supply over the next five years; and

• Paint grade mouldings, namely MDF and finger-joint, remain the preferred choice of consumers consistently accounting for more than 80 percent of U.S. moulding consumption. MDF mouldings are forecast to make further gains at the expense of finger-joint, which the report says will benefit North American producers that already have a cost advantage over imported MDF mouldings.


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