MYSTERIES OF THE LAYERD
BALTIC BIRCH PLYWOOD
Mystery often shrouds our multi-ply Birch principally because it originates in far off places. More often than not, the answer has been a shrug of the shoulders with the comment, “Well it does come from the Baltic States in Russia. Things are different there.” And then of course, there was global shortage of panel product earlier last year. In reality, is this an affect of global warming, or is this just another mystery from the enigmatic East. I hope these comments may answer some of your questions.
Is 5’ x5’ more available than 4’ x 8’ or vice versa?
Both 5’ x 5’ and 4’ x 8’ are more available now than at any time in the last 12 months. The problem we faced last winter of unseasonably warm weather and log shortages has not occurred this winter and all mills have enough raw materials to run at full capacity. The mills still have a very high demand for birch plywood and all mills are trying to sell as much material to either their domestic market or Europe as the domestic market, while small, is the market they receive the highest price from…and of course Europe has a huge advantage due to the strength of the Euro versus the US Dollar. North American is still a viable market for them and we do see more material headed this way, however, even with our record price levels of Russian Birch in North America, it is still below what Europe is able to offer the Russian suppliers. It is our opinion that we have a much higher chance of the European economy slowing before we see the dollar strengthening.
As for 5’ x 5’ production versus 4’ x 8’ production, Russia still produces 75% 5x5 panels vs. 25% in 4x8 or 10x5. This is changing as any new investment in Russia is always in large format presses and peeling lines. This again is geared for the European market. Not only are new investments being made in 4’ x 8’ lines, but many mills have closed their 5’ x 5’ lines as profitable as runs of 4’ x 8’. This is due to both the higher price received by selling 4’ x 8’ and the better efficiency of the new machinery being installed.
Why the global shortage?
The plain and simple answer, warm weather. The ground didn't freeze last winter causing serious havoc in transporation; no movement of raw product, no production of plywood = world shortage. And when production came back on line, Europe offered a more immediate, lucrative market.
Are prices still rising?
The pricing for Russian Birch has momentarily stabilized. It is typically at least a two-month cycle from purchase in Russia to arrival in North America; we are only seeing the November production arriving now. Beyond late spring, we can only wait to see if exchange rates change and/or European demands slow.
Do you see any substitutions popping up?
There are panels from Brazil, and all-Birch panels from China. The problem encountered again and again is that if you get a mill to do a product that is truly an equivalent, it always ends up being the same price or more expensive than Russian Birch. There is no dispute that the Russian products offers strength and stability; properties that are hard to replicate in other species.
China has come the closest by offering an all-birch panel. China’s advantage is its labour force. The problem China faces is a lack of raw materials; other than the poplar, China imports all of its birch, okoume, obeche, red oak, maple, etc. As for birch, all of it actually comes from Russia. In addition, China has significantly higher transportation costs of logs than the Russian producers. While they can save on labour, it is not enough to compensate for the additional transportation costs of raw material. So inevitably, the Chinese mills look for other ways to save money through thinner faces, inferior glue, and core veneers comprised of very small pieces of veneer that are hand joined. Probably the best replacement for a Russian Birch would be a domestic Birch panel produced here in North America.
Do you have any feeling for what the future hold?
A great question. Customers often tell me that they have to look at other products to use in place of Russian Birch due to the price, or that the Russians are going to lose the U.S. market due to the recent price increases. While these comments may be true in the short term, and we have seen customers in certain industries move to other products, we must all keep in mind that Russia contains 22% of the world’s forest area, the next largest forest countries are Brazil with 16%, Canada – 7%, and U.S. – 6%. I believe we have only begun to see the impact Russia will have in the world when it comes to natural resources of any kind.
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