What are the key topics for panel manufacturers this year?

“One of the industry’s main concerns is the regulation and limitation of various chemicals used in the industry, such as formaldehyde emissions. Formaldehyde is a compound used in industrial resins, adhesives, and coatings in engineered wood production. To protect human health, its usage regulations have been changed, and manufacturers are committed to adhering to these new regulations; a transition period has been set. Discussions are also ongoing at the European level about limiting melamine use. However, there is currently a lack of research and data to justify implementing restrictive measures.
Manufacturers are also focusing on promoting the reuse of panels. Another significant issue is the availability of wood resources over a 15–20 year period, the long-term use of wood, and the use of wood products in energy production, pulp manufacturing, and chemical processing.”

M.L.

How have the geopolitical and economic situation in recent years affected panel manufacturers in Europe?

“The European market both imports and exports a large volume of plywood products.
Therefore, wood industry players, including birch plywood manufacturers, throughout Europe, feel the impact of geopolitical events and the economic downturn. Due to the war, the main concerns are sanction evasion and price dumping, as well as the development of substitute products. Following Russia’s invasion of Ukraine and the subsequent sanctions and restrictions, manufacturers from aggressor countries have tried various methods to get their products into EU markets, including Latvia, via Kazakhstan, Turkey, and other countries. Unfortunately, products from sanctioned countries still enter the European market at unfairly and unjustifiably low prices. Dumping of Russian and Belarusian products can also be observed in markets without sanctions. All this significantly undermines the competitiveness of European plywood manufacturers.
The issue of fair competition, unjustified prices, and sanction evasion is also relevant to us. In 2020, Latvijas Finieris, together with a Polish manufacturer, initiated a European-level investigation into the dumping of birch plywood exports from Russia to EU countries. The information we gathered provided evidence of dumping, leading to the imposition of anti-dumping duties and other restrictions on the company responsible. This practice is also developing in Latvia – the State Forest Service imposed a € 10,000 fine on a company that imported high-risk birch plywood and had plans to import from Turkey. The company also received an additional penalty – a one-year ban on trading birch plywood. The fine was imposed for failing to comply with the EU Timber Regulation’s legality checks, allowing the risk of Russian-origin timber entering the market.
Undoubtedly, sanction evasion must be fought against. However, it’s not just a question of will – countries must have sufficient resources and expertise to tackle this issue. At the company level, we continue to cooperate with state institutions, share information, gather evidence on identified cases, and provide data to customs, the State Revenue Service, the State Forest Service, and others.
Each case, both at the European Union and member state level, sets a precedent and demonstrates that it is becoming increasingly difficult and inconvenient for dishonest market participants to evade sanctions. We need to continue educating responsible institutions and partners. The consequences of violating the imposed restrictions on the movement of goods and products from Russia and Belarus can be very painful. Know your supplier, know your customer!”

M.L.

What is the current state of the birch plywood market in Europe?

“Even before the war in Ukraine, European manufacturers had been suffering from the sale of products made in Russia and Belarus at unjustifiably low prices (dumping). Latvijas Finieris transformed plywood production in Finland. Other European market leaders have been forced to reduce capacity and halt investments in recent years. Customers, in turn, have sought substitute products made from tropical wood, eucalyptus, and other types of wood.
With the onset of aggression in Ukraine and the implementation of sanctions, there was no panic about a birch plywood shortage, as Russia and Belarus had increased their deliveries before the war, and stocks had been built up. As these reserves depleted, new challenges emerged – plywood of dubious origin, which, according to estimates, accounted for about 20% of the total European market in 2023. Furthermore, the global economic downturn and the decline in demand for plywood products have intensified competition among manufacturers, even in a protected market such as Europe.
Latvijas Finieris currently feels secure but remains cautious. Our development and growth strategy, focused on market diversification, product development, and long-term customer relationships, allows us to continue stable product manufacturing, ensure employment within our group, and invest in development. A veneer manufacturing facility has been opened in Kuldīga, and the expansion of the VEREMS plant in Rēzekne continues. We have also started a project to establish a synthetic resin manufacturing plant in Riga, which will significantly reduce the proportion of fossil phenol in adhesive production by replacing it with renewable lignin – a natural biopolymer found in wood.
We are not only the largest birch plywood producer in the Baltics but also among the leaders in Europe. However, this brings us the responsibility to address broader industry issues, such as the long-term availability and use of wood resources, the use of renewable resources, etc. Geopolitical events and the economic situation particularly highlight our responsibility not only for the well-being of our employees and their families but also for the growth of the national economy and the security and peace of society.”

M.L.