US Wood Panel Market Hit Hard by Pandemic, But Home Renovation Surge a Bright Spot

US demand for wood panels is forecast to increase nearly 1.0% annually through 2024 to 50.2 million square feet (as measured on a 3/8-inch basis), according to a new Freedonia Group analysis. Gains will be restrained by an overall stagnation in building construction spending, as the US economy recovers from the declines in 2020 due to the COVID-19 pandemic:

• Residential construction activity is a key driver of demand for wood panels, as it accounts for over half of the market in any given year. Hence, a severe drop in residential construction in 2020 due to the COVID-19 outbreak will depress wood panel demand growth over this period as the industry slowly recovers from the losses suffered in that year.
• Demand for wood panels used in commercial buildings is expected to suffer even steeper declines as many businesses were forced to shut down and faced reduced revenues even after reopening, which will limit spending on new buildings and renovations.

However, home renovation activity will remain a bright spot, as the residential I&R market for wood panels is supported by homeowners undertaking more projects – including the addition of rooms – in response to spending more time at home due to the pandemic.

Cabinets Are the Only Wood Panel Market Not Expected to Decline in 2020

Demand for wood panels is expected to drop in 2020 for all applications except cabinets, which will stagnate, and remain flat through 2024:

• Consumer preferences for larger wood cabinets that require more panels will support demand and offset an expected decline in cabinet production.
• Kitchen and bathroom renovations as more homeowners stay at home will also support demand, as cabinets are often replaced during these projects.
• However, growth will be prevented in part by the protracted recovery anticipated in the construction of commercial buildings in which cabinets are often used – such as hotels, office buildings, restaurants, and educational facilities.

The level of use of different wood panel products (e.g., particleboard, hardwood plywood, softwood plywood, MDF, OSB) varies by cabinet application. For instance, hardwood plywood is associated with higher end, custom cabinet production, while particleboard and MDF dominate low- to mid-range stock cabinets. However, material improvements in both MDF and particleboard have allowed these products to be used in higher end cabinets as well.

Strong Post-Pandemic Recovery Expected for the Flooring Market

While demand for wood panels used in flooring will drop significantly in 2020 due to Covid-19 construction trends, demand is expected to rebound in 2021 and continue to expand through 2024, driven by:

• a rebound in new single-family home construction
• rising spending on home renovation projects
• rising consumer preferences for engineered wood flooring over competing products like carpet and natural wood

Subflooring accounted for 85% of wood panels used in flooring applications in 2019 and will provide the majority of demand growth through 2024, driven by rising spending on home renovations such as flooring replacement or more extensive projects like room additions.

Shifts in flooring preferences will also support gains, as the increasing popularity of high-quality, hard surface flooring products will lead to greater use of multilayer flooring – and therefore to demand for the wood panels used as substrates in some of these products.

Roofing Will Remain the Largest Residential Wood Panel Market Through 2024

Roofing accounted for nearly a third of residential wood panel demand in 2019 and is expected to remain the leading application through 2024. An increase in roofing renovation projects both to fix damaged roofs and to strengthen existing roofs will support demand gains. The majority of wood panel use in roofing applications is generated by roof sheathing and decking requirements, although some demand is also created through use in roof framing and roofing trim products.

OSB is the dominant residential roofing wood panel product and is expected to increase its market share through 2024 at the expense of softwood plywood because of its superior durability and lower cost.

Rising OSB Use to Boost Residential Wood Panel Demand

Oriented strand board (OSB) is the leading residential wood panel product, as it is used in a number of structurally essential applications, including subflooring, roofing, wall sheathing, and siding. OSB is expected to see increased use in many of these applications because of its:

• high strength
• durability
• limited board imperfections
• resistance to impact and fire
• good thermal and acoustic properties

OSB is heavily used in engineered wood applications such as I-joists and rim boards, as the material offers such performance benefits as durability and versatility. Through 2024, demand for OSB in engineered wood products is forecast to grow at an above average pace as OSB takes share from medium density fiberboard and particleboard on the strength of its significantly lower cost.

Although from a small base, finish flooring will be the fastest growing application for OSB through 2024. Engineered wood flooring is increasingly being installed in residences and other areas where hard surface flooring is becoming more desirable, as it has better aesthetics than many LVT and laminate products but is less expensive and has better performance than natural wood.

Want to Learn More?

Wood Panels,  Flooring Wood Panels, and Oriented Strand Board are now available from the Freedonia Group.

About the Author:

Peter Kusnic is a Content Writer with The Freedonia Group, where he researches and writes studies focused on an array of industries.