BRAZIL - Brazilian GDP is estimated to drop 2.1% in 2015 and another 0.3% in 2016, impacting domestic board consumption.

According to the latest stats from IBA for the first ten months of the year, consumption is down 10.9% mainly due to a 10.0% drop in domestic sales. Although exports have risen in the period by an impressive 38% they still do not compensate the drop in domestic sales. While Brazilian producers have exported 139.000 more cubic meters, their domestic sales have dropped by 603,000 cubic meters.

More worrisome is the current trend, in October domestic board sales dropped 23.1% and 156,000 m3 compared to October 2014. In October exports were up 63% and 23,000 m3 compared to same month 2014. October was the seventh consecutive monthly drop in domestic consumption. Domestic sales are expected to drop again in 2016 as the recession continues to affect the economy.

Because of continuous domestic growth in panel consumption in the last decade up to 2014, Brazilian MDP/MDF panel producers did not have to prioritize exports. Now, main producers in Brazil - Duratex, Berneck, Arauco and Masisa - have progressively started to step up exports to compensate weakness of the domestic market.

The drop in domestic sales has also created a considerable impact on capacity utilization ratios. According to industry expert Bernard Fuller "MDP capacity ratios in Brazil fell from 89% in 2012-13 to 73% in 2014 and will average just 63% in 2015. Meanwhile, Brazil's MDF capacity jumped 37% in 2012-15, and production/capacity ratios consequently tumbled from 76% in 2012 to 71% in 2013-14 and will average just 67% in 2015." 

Brazil Wood Based Panels in October*

Thousand m3

Brazil Wood Based Panels January-October*

Thousand m3

Brazil Wood Panel Consumption*

Thousand m3