Global demand for plywood and OSB increasing
Despite some risks in the short term, an increasingly positive global economic outlook will drive the demand for plywood and oriented strand board (OSB) over the five years from 2011 to 2015, according to BIS Shrapnel. BIS Shrapnel’s Plywood and Oriented Strand Board in the Pacific Rim and Europe, 2011 - 2015 report forecasts strong growth in the production and consumption of plywood and OSB as the global economic upturn strengthens. The economic upturn will be driven by housing construction, furniture manufacturing and other sectors where plywood and OSB are used. BIS Shrapnel says housing construction in the United States is now in the early stages of an upturn and is expected to strengthen considerably from 2011 to 2015.
“Stronger growth in housing construction and economic growth in the United States will be supported by growth in the ‘emerging markets’ of Asia and South America, which will have a positive impact on Europe and Australasia,” says report author and BIS Shrapnel Forestry director and senior manager, Bernie Neufeld.
“While the recent shocks to the global economy such as the tragic earthquake and tsunami in Japan will have a negative impact on the demand for plywood and OSB in the short term, the outlook over the longer term is positive,” continues Neufeld. “There are at least three large plywood plants in the Miyagi prefecture and the destroyed plants supply an estimated 25 per cent of plywood produced in Japan. This will reduce production capacity in Japan in the face of much stronger demand due to the reconstruction process. Together with a strengthening global economy, the reconstruction effort in Japan will boost demand for plywood and OSB, and will present export and investment opportunities.”
BIS Shrapnel Forestry notes there has been a rapid change in plywood and OSB markets over the past decade. “There has been a shift of plywood production from traditional sources such as South Asia, North America and Europe to China,” says Neufeld. “There has also been a shift of production and consumption of OSB as a cost effective substitute for plywood, from North America to Europe and South America. Over the forecast period China, Eastern European countries and Russia will emerge as significant OSB producing regions, which will have a major impact on the dynamics of the market.
While plywood is still a preferred product for many applications on the basis of its quality, other regions will increasingly use OSB as a substitute where cost and resource constraints are a factor. BIS Shrapnel Forestry says OSB could be the next new product to emerge in China and other Asian countries.
BIS Shrapnel Forestry is forecasting global consumption of plywood to grow at an average rate of about five per cent per year, and OSB at eleven per cent over the five year forecast period. The rate of growth projected for plywood consumption is higher than the forecasts for production, while the rate of growth for consumption of OSB is lower than forecasts for production. This suggests that there may be an undersupply of plywood and an excess supply of OSB, which will likely result in considerable substitution of OSB in place of plywood.
Production of plywood is projected to increase from 71 million cubic metres in 2010 to 84 million cubic metres in 2015, and OSB from 18 million cubic metres to 28 million cubic metres respectively, based on current expansion plans and estimated capacity utilisation rates. By 2015, North Asia will be producing 54 per cent of the world’s plywood, down marginally from 56 per cent in 2010, and North America will be producing 77 per cent of the OSB.