How the Global Supply Chain Impacts Cabinetry Products
The situation across our industry — for all products — will be a challenge for the remainder of the 2021. Global supply restraints will continue to hinder the ability for our industry to recover. Many experts believe the timeline to see improvement on the global supply chain has now been pushed back to 2023.
Imports from overseas are critical to the manufacturing capabilities to our industry. MDF items that large retail outlets sell largely come from South America. Around 50% of the core products used to make plywood in North America comes from overseas. We do not have the manpower, infrastructure, or plant capacity in North America to fill this 50% gap we have been experiencing. Imports do trickle in but when you factor in $21,000 extra just to get your container loaded, the cost impact is significant. Evident by the sudden surge in pricing of Baltic Birch — which 8 months ago cost rough mills .380 PSF —costs roughly .975 PSF today.
Hardwood Plywood is under severe pressure due to production capacity cuts of approximately 50% over the entire industry in the past few months due to COVID-19, fires, and weather challenges. Lack of core material being able to be made domestically coupled with the aforementioned Baltic cost issues continue to push costs higher. Currently, the only alternative to make up core shortages is the use of Baltic — which even when available comes at a price.
Thin MDF: Severe supply constraints have started and will continue through the remainder of the year due to a lack of imported lower cost products being available. The largest thin MDF producer in the world, located in New Zealand, has made the determination to no longer ship items to the east coast due to the amount of time it takes a vessel to get to the east coast. Instead, they will only send the ships to the west coast, which as of late August had 44 ships anchored off the coast of long beach awaiting unloading. This causes additional transport fees to everyone involved.
Thick MDF continues to struggle with mills’ production approximately one to two weeks behind schedule due to an array of issues. Price increases continue at the rate of approximately one per month. Most MDF mills have cut the number of orders they will accept for the months of September, October, and November by 50% with the hope of making up some ground and allowing for necessary downtime for maintenance to machinery.
As we learn more, we will keep you updated on the market rumblings.