Over the last decades, Brazil has emerged as a strong global MDF and MDP producer. However, with the political and economic difficulties that have led to a decrease in local consumption, Brazilian MDF and MDP producers have faced a strong slowdown in growth, which has led to a considerable increase in export share.
Several companies have responded to the changing market challenges in the region. This was important, not just for their shareholders, who have become used to very good net profit margins, but also for the global MDF industry..
Most of the MDF producers have had to make drastic changes in the way their production plants operate. For example, they have adapted their continuous production strategies to accommodate reduced working time, stock inventory, etc. Some started producing only after an order arrives, others even had to stop temporally.
By 2014, Latin American demand for MDF exceeded 5.7 million m³ after growing by 15% per year during the previous decade. This growth occurred mainly in Brazil, with the Brazilian MDF market now representing about 70% of the total Latin American market.
The increasing MDF consumption in Latin America has been driven by strong economic growth, an expanding furniture industry and buoyant construction.
The Brazilian furniture industry today consumes much more MDF per unit of furniture produced than their Western European counterparts.
In the construction sector, the volume of MDF used per unit of output in Brazil has almost doubled since 2008.
In 2009, the world's largest MDF line started in Brazil, with a nameplate capacity of 700,000 m³.
However, the strong demand for growth was accompanied by a considerable expansion of production capacity, with MDF capacity in Latin America surging to more than six million m³ in 2012.
Several Latin American groups started to take the lead in the race to install new production lines and the combined MDF capacity of the three largest companies now represents over two thirds of the total Latin American MDF capacity.
Capacity has continued to grow in Brazil with further investments in new production lines, especially in the northern regions of Brazil. Thanks to these investments, the nameplate capacity has been increasing by 15% every year since 2014 and will continue to grow until 2019.
The Brazilian MDF market is starting to show some signs of saturation, which is not surprising due to the temporary economic weakness. However, at the same time, new marketing strategies are being developed as well. With an additional increase in MDF capacity predicted to come on line in Brazil between 2015 to 2019 in a market where demand is slowing, Brazilian producers have now set their sales strategies to focus on the North American market. DGrowing exports from Brazil to other South American markets are supported by the temporary, export-favourable exchange rate for Brazilian currency, however this might change again.
For Brazilian producers, entering international markets has meant that they have had to pay close attention to international production standards and norms, transport costs and international price levels.
In the final quarter of 2016, the Brazilian wood industry has shown a very promising increase in sales and production. This is due to the radical change occurring in the overall political structure and also to the local product being well-positioned in the international market. Companies are returning to continued growth and expansion. .
A very positive ForMobile exhibition in Sao Paulo in July, 2016, and further conferences during the European Woodworking Symposium in Hamburg, in October of this year, have confirmed that there is clear trend towards new developments in added value products. These include new German technologies for melamine applications, lacquering technologies, a new digital printing generation and metal surfaces over MDF and MDP. The same applies to a continuous optimization of production capacity, cost and quality and environmental technologies.
Signs for the second half of 2017 and the coming years confirm a good chance for recuperation and future growth. Inserco is prepared to be your partner in these developments.