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fF EVER there were a perfect storm. Irecent developments faced by North American particleboard and medium density fiberboard producers would come close to meeting the definition.

Plummeting demand, limited fiber availability. soaring resin costs. new environmental standards. and a strengthening Canadian dollar, among other things, make for an extremely harsh business environment. and we fear the worst is yet to come.

Falling demand for lumber, plywood, oriented strand board (OSB), particleboard (PB), and medium density fiberboard (MDF) has kept market prices at or below break-even levels for all but the lowest-cost producers. As a result, production of wood products has dropped precipitously in the last few months and a rebound is not expected until 2009 (Figure I ).

For mills that utilize residual shavings and sawdust from lumber, plywood and OSB to manufacture composite products like PB and MDF, there is added cause for concern. Due to recent production curtailments, lumber, plywood and OSB mills are not generating enough sawdust and shavings to supply the wood fiber needs of many PB and MDF producers. It has been reported that some sawmills are even putting their PB and