s and painted surface boards. The market is valued at approximately ?749m in 2006, representing an increase of some 38% from 2000.

Overall wood panel production volumes, reflecting trends within the wider timber and sawmilling sector, have remained relatively healthy, despite falling demand from some key markets such as furniture manufacture. Demand from the construction sector, in spite of a fall in output and the failure of public sector activities to reach expected levels, has remained relatively constant, although a decline was noted toward the end of 2005. 2006 has shown a slight improvement in construction activity, however, the overall decline has affected panel manufacturers who have also been struggling with increasing energy costs and more expensive raw materials – in parti

Wood-based panels are a part of the general timber industry, one of the UK’s largest and most diverse business sectors. The increasing globalisation of key industry sectors such as the timber industry means that they are more easily affected by a wide range of influences including:

* Over-capacity in some regions and under-supply in others;
* Consolidation of supplier networks;
* Raw material shortages;
* Increases in input costs such as energy and labour.

The UK wood-based panels market grew by 26% in value terms between 2000 and 2006, showing moderate but consistent growth of between 2% and 4% per annum, apart from 2003/4 when growth reached 11%.

The 11% growth in 2004 was encouraged, in part, by a general upturn in the economy after a few years of recession, but was also due to a number of other factors, including a strengthening of demand for particleboard, which peaked in the last quarter of 2004 with some manufacturers reporting up to 10-week lead times. MDF and OSB also enjoyed strong demand as well as record output throughout the European market as well as within the UK, and the cost of plywood is also reported to have skyrocketed during 2004, further increasing market value. Good growth therefore occurred in 2004 despite a slowdown in the furniture sector which was experiencing a drop in demand, consolidation and some loss of production to offshore locations.

Demand for wood-based panels in the UK varies according to panel type, relying on differing levels of demand from diverse end-use sectors:

Demand for particleboard remained stable for most of 2004, but fell in 2005 as a result of the slump in consumer spending and reduced demand from furniture manufacturers. Market value peaked in 2003/04 at ?660m, however has since declined to an estimated ?643m in 2006.

The MDF market stagnated during 2004 and 2005, with growth constrained by energy price increases affecting the product’s competitiveness.

The market for fibreboard has grown substantially since 2000 however - some 40% - reaching ?320m in 2006.

Late 2003 and 2004 saw the beginning of a relatively buoyant period for OSB, with a shortage of plywood helping to boost sales. This continued into 2005 and 2006 and had a stabilising effect on prices and margins, further increasing confidence in the market and proving beneficial for manufacturers. The OSB market was valued at around ?85m in 2006, up from ?50m in 2000.

The performance of the plywood market in the UK has followed a somewhat erratic path, as a result not only of the ups and downs of the construction sector, but also the decline in UK-based production. 100% of the plywood used within the UK is now imported and this situation is unlikely to change. The market for plywood is currently thought to be in the region of ?347m, up from ?285m in 2000.

The market for decorative panels is difficult to estimate with any accuracy as there is considerable overlap between this and the particleboard, plywood and fibreboard categories. Decorative panels include melamine-faced and veneered fibreboard, plywood and particleboard; high pressure decorative laminated boards and painted surface boards. The market is valued at approximately ?749m in 2006, representing an increase of some 38% from 2000.

Overall wood panel production volumes, reflecting trends within the wider timber and sawmilling sector, have remained relatively healthy, despite falling demand from some key markets such as furniture manufacture. Demand from the construction sector, in spite of a fall in output and the failure of public sector activities to reach expected levels, has remained relatively constant, although a decline was noted toward the end of 2005. 2006 has shown a slight improvement in construction activity, however, the overall decline has affected panel manufacturers who have also been struggling with increasing energy costs and more expensive raw materials – in partic

ssion, but was also due to a number of other factors, including a strengthening of demand for particleboard, which peaked in the last quarter of 2004 with some manufacturers reporting up to 10-week lead times. MDF and OSB also enjoyed strong demand as well as record output throughout the European market as well as within the UK, and the cost of plywood is also reported to have skyrocketed during 2004, further increasing market value. Good growth therefore occurred in 2004 despite a slowdown in the furniture sector which was experiencing a drop in demand, consolidation and some loss of production to offshore locations.

Demand for wood-based panels in the UK varies according to panel type, relying on differing levels of demand from diverse end-use sectors:

Demand for particleboard remained stable for most of 2004, but fell in 2005 as a result of the slump in consumer spending and reduced demand from furniture manufacturers. Market value peaked in 2003/04 at ?660m, however has since declined to an estimated ?643m in 2006.

The MDF market stagnated during 2004 and 2005, with growth constrained by energy price increases affecting the product’s competitiveness.

The market for fibreboard has grown substantially since 2000 however - some 40% - reaching ?320m in 2006.

Late 2003 and 2004 saw the beginning of a relatively buoyant period for OSB, with a shortage of plywood helping to boost sales. This continued into 2005 and 2006 and had a stabilising effect on prices and margins, further increasing confidence in the market and proving beneficial for manufacturers. The OSB market was valued at around ?85m in 2006, up from ?50m in 2000.

The performance of the plywood market in the UK has followed a somewhat erratic path, as a result not only of the ups and downs of the construction sector, but also the decline in UK-based production. 100% of the plywood used within the UK is now imported and this situation is unlikely to change. The market for plywood is currently thought to be in the region of ?347m, up from ?285m in 2000.

The market for decorative panels is difficult to estimate with any accuracy as there is considerable overlap between this and the particleboard, plywood and fibreboard categories. Decorative panels include melamine-faced and veneered fibreboard, plywood and particleboard; high pressure decorative laminated boards and painted surface boards. The market is valued at approximately ?749m in 2006, representing an increase of some 38% from 2000.

Overall wood panel production volumes, reflecting trends within the wider timber and sawmilling sector, have remained relatively healthy, despite falling demand from some key markets such as furniture manufacture. Demand from the construction sector, in spite of a fall in output and the failure of public sector activities to reach expected levels, has remained relatively constant, although a decline was noted toward the end of 2005. 2006 has shown a slight improvement in construction activity, however, the overall decline has affected panel manufacturers who have also been struggling with increasing energy costs and more expensive raw materials – in parti

d remained stable for most of 2004, but fell in 2005 as a result of the slump in consumer spending and reduced demand from furniture manufacturers. Market value peaked in 2003/04 at ?660m, however has since declined to an estimated ?643m in 2006.

The MDF market stagnated during 2004 and 2005, with growth constrained by energy price increases affecting the product’s competitiveness.

The market for fibreboard has grown substantially since 2000 however - some 40% - reaching ?320m in 2006.

Late 2003 and 2004 saw the beginning of a relatively buoyant period for OSB, with a shortage of plywood helping to boost sales. This continued into 2005 and 2006 and had a stabilising effect on prices and margins, further increasing confidence in the market and proving beneficial for manufacturers. The OSB market was valued at around ?85m in 2006, up from ?50m in 2000.

The performance of the plywood market in the UK has followed a somewhat erratic path, as a result not only of the ups and downs of the construction sector, but also the decline in UK-based production. 100% of the plywood used within the UK is now imported and this situation is unlikely to change. The market for plywood is currently thought to be in the region of ?347m, up from ?285m in 2000.

The market for decorative panels is difficult to estimate with any accuracy as there is considerable overlap between this and the particleboard, plywood and fibreboard categories. Decorative panels include melamine-faced and veneered fibreboard, plywood and particleboard; high pressure decorative laminated boards and painted surface boards. The market is valued at approximately ?749m in 2006, representing an increase of some 38% from 2000.

Overall wood panel production volumes, reflecting trends within the wider timber and sawmilling sector, have remained relatively healthy, despite falling demand from some key markets such as furniture manufacture. Demand from the construction sector, in spite of a fall in output and the failure of public sector activities to reach expected levels, has remained relatively constant, although a decline was noted toward the end of 2005. 2006 has shown a slight improvement in construction activity, however, the overall decline has affected panel manufacturers who have also been struggling with increasing energy costs and more expensive raw materials – in parti

turers. The OSB market was valued at around ?85m in 2006, up from ?50m in 2000.

The performance of the plywood market in the UK has followed a somewhat erratic path, as a result not only of the ups and downs of the construction sector, but also the decline in UK-based production. 100% of the plywood used within the UK is now imported and this situation is unlikely to change. The market for plywood is currently thought to be in the region of ?347m, up from ?285m in 2000.

The market for decorative panels is difficult to estimate with any accuracy as there is considerable overlap between this and the particleboard, plywood and fibreboard categories. Decorative panels include melamine-faced and veneered fibreboard, plywood and particleboard; high pressure decorative laminated boards and painted surface boards. The market is valued at approximately ?749m in 2006, representing an increase of some 38% from 2000.

Overall wood panel production volumes, reflecting trends within the wider timber and sawmilling sector, have remained relatively healthy, despite falling demand from some key markets such as furniture manufacture. Demand from the construction sector, in spite of a fall in output and the failure of public sector activities to reach expected levels, has remained relatively constant, although a decline was noted toward the end of 2005. 2006 has shown a slight improvement in construction activity, however, the overall decline has affected panel manufacturers who have also been struggling with increasing energy costs and more expensive raw materials – in parti

s and painted surface boards. The market is valued at approximately ?749m in 2006, representing an increase of some 38% from 2000.

Overall wood panel production volumes, reflecting trends within the wider timber and sawmilling sector, have remained relatively healthy, despite falling demand from some key markets such as furniture manufacture. Demand from the construction sector, in spite of a fall in output and the failure of public sector activities to reach expected levels, has remained relatively constant, although a decline was noted toward the end of 2005. 2006 has shown a slight improvement in construction activity, however, the overall decline has affected panel manufacturers who have also been struggling with increasing energy costs and more expensive raw materials – in particular resin.

Substitution of one material for another is an ongoing trend affecting the market share of individual panel types. The use of OSB for example has been boosted by a shortage of plywood, and OSB is also increasingly replacing particleboard in the soft-furnishing framing sector.

In terms of supply the wood-based panels sector remains dominated by large international players, many having head offices in the UK or Europe. Around a third of all panels consumed locally (around 6.5m m3) are imported (excluding plywood which is 100% imported).

UK producers of wood panel products turn over an estimated ?650m. There are eight wood panel manufacturing plants in the UK. The industry employs over 2,500 people on a direct basis, and supports a further13,000 contract and maintenance workers. Existing production facilities are being utilised to full capacity and, apart from Egger UK’s recent ?100m investment to expand facilities at their Hexham plant (to be completed in 2007), there is little expansion taking place or planned for the near future.

Imports of wood panels including plywood as well as a number of other fibreboard types are imported primarily from Europe, but also North and South America as well as – and increasingly - China.