MDF prices are forecast to grow faster due to continued rising demand from construction.
Los Angeles, CA (PRWEB) July 04, 2014
Medium density fiberboard (MDF) has a buyer power score of 2.9 out of 5, reflecting moderate negotiating conditions for buyers. MDF price movements depend largely on residential and nonresidential expenditure levels, as well as private spending on home improvements. These drivers have exhibited strong growth over the three years to 2014, boosting demand for MDF. According to IBISWorld procurement analyst Jesse Chiang, “growing demand for MDF has allowed suppliers to increase their prices, lowering buyer negotiation power.” Rising prices are restraining buyer power because buyers are less able to delay contractual decisions with prices increasing continuously. Instead, buyers must negotiate contracts to lock in lower prices. Prices are forecast to grow substantially over the three years to 2017, which will continue to reduce buyer power in the coming years.
Price increases for inputs such as lumber also led to price growth for MDF, limiting negotiation flexibility for suppliers that struggled to maintain profitability. As a result, buyers have had fewer opportunities to arrange favorable deals and negotiate lower prices. Additionally, moderate market share concentration and product specialization have created a tougher purchasing environment for buyers. “Large, vertically integrated operators have significant market power, while moderate product specialization reduces buyers' ability to locate suppliers capable of satisfying their specific product requirements,” says Chiang.
Nevertheless, buyers do have some considerable advantages. The high availability of substitute goods ensures that buyers are not forced to accept major concessions in their contracts because of their ability to switch to other suppliers that distribute alternative building materials. Secondly, low switching costs limit suppliers' ability to charge higher prices. Lastly, despite high demand driver volatility, volatility in prices for MDF products has been low. This factor has benefited buyers by making inventory planning and budget forecasts easier. The top four vendors in the market are Louisiana-Pacific, Weyerhaeuser, West Fraser Timber, and Plum Creek Timber.
For more information, visit IBISWorld’s Medium Density Fiberboard procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of medium density fiberboard (MDF). MDF is an engineered wood product made of a mixture of wood fibers, resin and wax. MDF does not have knots or grain patterns, making it easy to work with in many building applications. Due to its strength and comparatively low cost, furniture manufacturers use MDF as a substitute for hard wood products. Both manufacturers and wholesalers supply MDF.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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