LOS ANGELES – A new analysis of medium-density fiberboard (MDF) pricing trends projects buyers still have some ability to negotiate terms of purchasing contracts, including price and other terms of delivery.

IBISWorld Research, which has established a gauge to measure buying power, says MDF purchasers "Buying Power" stands at 2.9 out of a potential 5, meaning they hold some leverage to negotiate contract terms over the next year. Their ability to deal declined for the past three years, as residential and commercial construction picked up steam.

During the period buyers had minimal opportunities to negotiate better deals for MDF due to price increases for the ingredients, principally wood fiber and resin. This period also limited pricing flexibility for medium-density fiberboard suppliers, who struggled to maintain profitability.

Market share concentration and product specialization have also created a negative environment for buyers. Large, vertically integrated operators have significant market power, according to IBISWorld, while moderate product specialization reduces the ability of buyers to locate suppliers capable of satisfying their specific product requirements. Current major suppliers include Georgia-Pacific Corporation, Weyerhaeuser Company, Boise Cascade Company and West Fraser Timber Co.

Working in favor of buyers is a high availability of substitute panel options, and low switching costs, limiting suppliers' ability to charge higher prices. So volatility in prices for medium-density fiberboard products has been low.