ENGINEERED WOOD MARKET ANALYSIS

Market Size and Trends

The engineered wood market is estimated to be valued at USD 7.65 Bn in 2024 and is expected to reach USD 12.53 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 7.3% from 2024 to 2031.

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The market has been witnessing steady growth over the past few years driven by increasing residential and non-residential construction activities globally. The demand for engineered wood is expected to increase significantly during the forecast period driven by rising consumer preference for sustainable and eco-friendly construction materials. The market is gaining more acceptability over solid wood owing to advantages such as dimensional stability, strength, uniformity, and ability to be easily machined into various shapes and sizes. Additionally, supportive government policies and regulations pertaining to use of engineered wood especially in developed markets will further aid the market expansion through 2031.

Growing demand from construction industry

The engineered wood market is expected to witness significant growth in demand driven mainly by the robust growth of the construction industry globally. There has been a growing acceptability of engineered wood products such as plywood, oriented strand board (OSB), glulam, cross-laminated timber (CLT). and nail laminated timber (NLT) in the construction of buildings with wood-frame construction gaining more popularity over concrete and steel structures. The engineered wood products provide advantages over sawn wood as they can be manufactured in large dimensions with more consistency and are more durable and stronger.

Many countries across the world are aiming to reduce the carbon footprint of the construction industry by promoting the use of wood-based materials in construction which is driving the demand for engineered wood. Various government policies and building codes are also encouraging the use of mass timber products made of engineered wood in commercial and residential construction. The growing construction of multi-family residential buildings and non-residential buildings will significantly boost the demand for I-beams, laminated veneer lumber, and nail laminated timber which are widely used in floors, walls, and roofing structures in wood-frame buildings. Many developers are also opting for wood-frame construction for its quicker construction time, ease of installation, and cost-effectiveness. With rapid urbanization leading to building construction activities worldwide, the engineered wood market is expected to grow substantially in the coming years.

Market Concentration and Competitive Landscape

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Diminishing forest resources

Another key driver contributing to the rising demand of engineered wood is the diminishing natural forest resources and the need for sustainable utilization of wood resources. Over the past few decades, there has been growing concerns regarding deforestation and its impact on the environment. Extraction of wood from natural forests is witnessed to decline sharply due to shrinking forest areas and implementation of stricter wood procurement policies to promote afforestation. However, the requirement of wood as a construction material continues to increase. Engineered wood products help overcome this challenge of limited natural wood resources as they utilize wood residues and by-products which would otherwise be wasted. Using wood residues efficiently through manufacturing processes of engineered wood extends the life span of forest resources.

The engineered wood market provides an avenue to make the optimal use of small-diameter trees, wood wastes, and other wood by-products. It helps avoid further depletion of natural forests for construction needs.

Key Takeaways from Analyst:

The rising construction activities across both residential and non-residential sectors will be a key driver pushing the demand for engineered wood products. Properties like strength and durability make engineered wood preferable to solid wood for construction applications. Further, engineered wood requires less maintenance and has gained acceptance as an eco-friendly substitute for tropical hardwood.

Volatility in raw material prices poses a challenge. Fluctuations in wood prices directly impact production costs. Availability of low-cost solid wood alternatives can also restrain the market to some extent. Strong competition from substitutes like metal, plastic, and concrete compromises the market potential.

Product innovation and development of advanced wood composite materials provide new opportunities. Manufacturers are focusing on value-added products with enhanced technical and aesthetic features. Meanwhile, strategic partnerships across the supply chain help boost profitability. The Asia Pacific region, led by China and Japan, currently dominates the global demand. North America also accounts for a substantial share aided by ongoing renovation and construction projects.

Market Challenges: Volatility in raw material prices

Volatility in raw material prices has acted as a major restraining factor for the growth of the engineered wood market. Engineered wood products are primarily manufactured using raw materials like wood, binders, and resins. However, prices of these key raw materials fluctuate significantly due to various global and local factors affecting their supply and demand dynamics.

Market Opportunities: Product innovation

Product innovation could be a major opportunity for growth in the engineered wood market. Engineered wood products like plywood, oriented strand board, and glue laminated timbers have increasingly become substitutes for solid wood over the past few decades. These composite wood products are highly customizable and offer performance and consistency benefits over traditional wood. As builders and architects seek out more sustainable and environment-friendly building materials, engineered wood provides a renewable and recycled wood alternative. With advancements in wood science and adhesive technologies, product developers can continue enhancing the structural integrity, durability and design possibilities of engineered wood.

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Insights by Type: Versatile applications drive the segment growth

In terms of type, plywood is expected to contribute the highest share of the market and it is expected to hold 33.4% of the market share in 2024. Plywood has widespread use across various end-use industries. Plywood possesses excellent structural integrity compared to solid wood boards of similar thickness. This is because, its cross-laminated construction allows it to uniformly distribute stress and weight, making it very strong yet lightweight.

Plywood finds applications in construction activities like wall sheathing, flooring decking, and roof sheathing due to its dimensional stability and rigidity. It is durable enough for outdoor use and absorbs moisture and swelling better than solid wood. In furniture making, plywood is used to create chair seats, tabletops, and other components given its ability to maintain its shape even under pressure or weight. The automotive sector utilizes plywood in accoutrements like door trims and panels where strength meets aesthetic design. Being cost-effective in nature, plywood appeals to both commercial and household users. Its smooth, flat surfaces make it ideal for painting, laminating or applying other decorative finishes. The wide assortment of wood veneer choices allows plywood panels to match interior designs closely. Overall, plywood delivers a unique combination of attributes that has helped sustain its dominant position in the engineered wood landscape.

Insights by Application: Rapid urbanization and infrastructure growth

In terms of application, residential is expected to contribute the highest share of the market. This segment is expected to hold over 45.4% of the market share in 2024 due to the exponential growth of the housing industry worldwide. Expanding urban populations and the increasing need for living spaces have enhanced the demand for residential construction globally.

Wide-scale afforestation programs complemented by sustainable wood production techniques have enhanced the availability of engineered wood products for the residential construction sector. Their dimensional stability, workability, and design flexibility make them suitable for wall framing, flooring systems, roof trusses and other structural elements in homes. This has augmented their adoption compared to traditional woods.

Governments across developing nations are undertaking several initiatives to provide housing to all. Mega infrastructure projects involving buildings, apartments, and townships require massive amounts of engineered wood. Their load-bearing capacity, prefabricated nature, and resistance to warping justify their preference over other alternatives. In developed markets as well, engineered woods are penetrating the remodeling, extension and renovation activities of residential properties.

Regional Insights

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North America has established itself as the dominant regional market for engineered wood. The region is expected to account for 34.4% of the market share in 2024. The region accounts for the largest market share owing to a strong presence of major industry players and suppliers. The U.S. is the largest producer and consumer of engineered wood in the world given robust construction industry in the country. Several large companies have manufacturing facilities spread across the U.S. and Canada to cater to the growing domestic demand. These companies invest heavily in R&D to develop advanced wood panel technologies. This has ensured that North American brands dominate the global trade of medium density fiberboard (MDF), particleboard and laminated veneer lumber (LVL).

The Asia Pacific region has emerged as the fastest growing market for engineered wood over the past decade. China is pioneering this growth due to massive investments in industrial and infrastructure development. Rapid urbanization coupled with rising disposable income has boosted demand for new residential and commercial construction. This has provided the necessary push for domestic manufacturers to ramp up production of wood panels, LVL and glue laminated timber. Meanwhile, other South-East Asian countries like Indonesia, Malaysia, and Vietnam are also contributing significantly to the overall regional growth. Their abundant supply of raw materials and availability of low-cost labor have made these countries attractive manufacturing hubs as well as exporter markets. As transportation costs remain low within the region, trade volumes of Asian wood panel brands are increasing substantially in global markets.

Market Report Scope

Key Developments

• In April 2024, SPAN FLOORS, a leading brand of wooden flooring & facades in India for luxury homes, announced the launch of Coswick's Quick-ship Collection, offering high end home owners an unprecedented variety of world class engineered wooden flooring available in stock or within a period of 45 days from order
• In 2022, Boise Cascade’s Building Materials Distribution (BMD) division announced the expansion of its distribution capacity in two markets
• In August 2020, Binderholz GmbH bought all the assets of Klausner Lumber One LLC, Florida in an auction for US$ 61.0 million. This acquisition of Klausner Lumber One LLC enables the company to expand its timber processing capabilities in the U.S.
• In January 2021, Boise Cascade inaugurated its second-door shop in Texas, U.S., which can serve approximately 900 customers. This new shop is in line with the company strategy to expand with the help of supplier partners.

*Definition: The engineered wood market refers to the production and sale of wood-based materials that are manufactured by binding together wood strands, veneers, lumber, or other forms of wood fiber. These engineered wood products include materials like plywood, oriented strand board, laminated veneer lumber, glulam, and cross-laminated timber. They provide advantages over solid wood like more consistent mechanical properties, resistance to cracking or warping, and ability to make longer and wider boards from smaller diameter logs. The engineered wood market has grown in popularity over the years as they provide a cheaper and sustainable alternative to traditional wood products.

Market Segmentation

•  Type Insights (Revenue, USD Bn, 2019 - 2031)
  • Plywood
  • Oriented Strand Board (OSB)
  • Glulam
  • Cross Laminated Timber (CLT)
  • Laminated Veneer Lumber (LVL)
  • Other Types
•  Application Insights (Revenue, USD Bn, 2019 - 2031)
  • Non-residential
  • Residential
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • Binderholz GmbH
  • Boise Cascade
  • Georgia-Pacific
  • HASSLACHER Holding GmbH
  • Havwoods India Pvt Ltd
  • Huber Engineered Woods LLC
  • KLH Massivholz Wiesenau GmbH
  • Kronoplus Limited
  • Louisiana-Pacific Corporation
  • Mayr-Melnhof Holz Holding AG
  • Norbord Inc
  • Nordic Structures
  • Woodtech Corporation
  • Resolute Forest Products
  • Roseburg
  • Stora Enso
  • West Fraser
  • Weyerhaeuser Company