European wood-based panel production costs could increase by up to 10-12% over the next four years as the Carbon Border Adjustment Mechanism (CBAM) is applied to industrial urea, according to estimates from the European Panel Federation (EPF) and Assopannelli. The potential increase could create additional cost pressure across the European wood, furniture and wood products industry, where MDF, particleboard and other engineered wood panels represent essential raw materials.

🌲 The issue is linked to industrial urea, a critical component used in the production of adhesives and resins for wood-based panels. From January 1, 2026, imports of urea are covered by the EU's Carbon Border Adjustment Mechanism.

According to EPF and Assopannelli, European production currently covers only around 20% of industrial urea demand. Imports therefore remain structurally important for European manufacturers of MDF, particleboard and other wood panels.

Wood panel production costs could rise by 10-12%

The industry organisations estimate that the application of CBAM to industrial urea could result in an increase of up to 10-12% in wood panel production costs over four years.

It is important to distinguish this estimate from an immediate 12% increase in panel market prices. The figure refers to a potential increase in production costs, while the final impact on MDF, particleboard, OSB and other panel prices will depend on energy costs, raw wood prices, resin prices, production efficiency, supply contracts and competitive conditions.

🪵 Nevertheless, even a partial transfer of these additional costs into selling prices could have significant implications for furniture manufacturers, particularly companies producing kitchens, wardrobes, office furniture, flat-pack furniture and other products with a high proportion of engineered wood panels.

Why industrial urea matters to the wood and furniture industry

Industrial urea is used to manufacture resins and adhesives that bind wood fibres, particles and veneers together. These adhesive systems are fundamental to the production of MDF, HDF, particleboard, plywood and other engineered wood products.

As a result, changes in urea costs can move through the supply chain from chemical producers and panel manufacturers to furniture factories and eventually to distributors and retailers.

The situation is particularly relevant because EPF states that more than 60% of wood-based panels produced in Europe are manufactured using recycled wood. The European panel industry therefore argues that additional carbon-related input costs could weaken the competitiveness of a sector already playing an important role in the circular wood economy.

Impact on furniture manufacturers

For the European furniture sector, wood-based panels represent one of the most important material inputs. An increase in panel production costs could therefore affect several areas of business operations.

Furniture production costs: Manufacturers using large volumes of particleboard and MDF may face higher raw material expenditure, particularly in price-sensitive market segments.

Furniture margins: Companies may initially absorb part of the increase in order to remain competitive, putting additional pressure on operating margins.

Finished furniture prices: If higher panel costs persist, part of the increase could gradually be transferred to wholesalers, retailers and final customers.

Procurement strategies: Furniture manufacturers may increasingly compare panel suppliers across several European markets, negotiate longer-term contracts or evaluate alternative materials and specifications.

European furniture producers could face a competitive disadvantage

🌳 One of the industry's main concerns is that CBAM currently applies to certain raw materials and semi-finished products but does not necessarily create the same cost structure for finished furniture imported into the European Union.

EPF warns that this could potentially favour furniture manufactured outside the EU if European panel and furniture producers face higher input costs while imported finished products are not exposed to equivalent costs at the same stage of the value chain.

For European furniture manufacturers already competing with producers from Asia and other lower-cost manufacturing regions, even relatively small differences in raw material costs can become important in large-volume and price-sensitive product categories.

Wood prices and panel markets remain key indicators

The potential increase comes at a time when European wood processors continue to monitor wood prices, panel prices, timber supply and international trade flows.

WoodBusinessPortal.com previously reported that the Italian wood-furniture supply chain generated approximately EUR 50 billion in revenue in 2024, with the furniture sector accounting for more than EUR 37 billion. The same market analysis highlighted the importance of raw material and panel costs for the competitiveness of the industry.

Read more about the Italian wood and furniture industry, wood prices, exports and market trends on WoodBusinessPortal.com.

MDF, OSB and particleboard markets require closer monitoring

Panel markets can already experience considerable variations in production, imports, exports and prices depending on construction activity, furniture demand and raw material availability.

For example, Germany's OSB exports declined significantly in 2025, while regional imports remained an important component of supply. Such developments underline the increasingly interconnected nature of the European wood panel and engineered wood market.

Professionals can follow developments in OSB exports, engineered wood panels and European wood market prices on WoodBusinessPortal.com.

What should furniture and wood companies monitor?

For furniture manufacturers, wood panel distributors and other businesses across the wood supply chain, several indicators will be particularly important during the coming years:

• MDF and particleboard contract prices;
• industrial urea and resin costs;
• raw wood and recycled wood availability;
• energy and transport costs;
• wood panel imports and exports;
• European furniture production and demand;
• changes to CBAM and other EU environmental regulations.

Companies should also compare suppliers and sourcing opportunities across different markets. The international wood products Buy & Sell marketplace on WoodBusinessPortal.com provides access to offers and demands covering timber, plywood, panels, sawn wood and other wood products.

Outlook for the wood and furniture sector

The estimated 10-12% increase in wood panel production costs should currently be viewed as a medium-term risk scenario rather than an already realised price increase.

The actual impact will depend on the evolution of carbon costs, urea imports, European chemical production, panel manufacturers' efficiency and their ability to absorb or pass on additional expenses.

For furniture manufacturers, however, the issue highlights the growing importance of raw material monitoring. Wood prices, panel prices, imports, exports and regulatory costs are becoming increasingly interconnected and can directly influence margins and competitiveness.

Sources

European Panel Federation (EPF) - EPF and Assopannelli call for suspension of CBAM on industrial urea; estimates of a potential 10-12% increase in wood panel production costs and information on industrial urea dependency.

WoodBusinessPortal.com - Italian wood-furniture supply chain, revenues, exports, wood prices and panel market trends.

WoodBusinessPortal.com - Germany's OSB exports, imports, engineered wood panel prices and European market developments.

Follow the global wood market with WoodBusinessPortal.com

📊 Raw material costs can quickly change the competitiveness of wood and furniture manufacturers. Monitoring wood prices, timber availability, MDF and particleboard markets, international trade and regulatory developments is therefore becoming increasingly important.

Visit WoodBusinessPortal.com for wood industry statistics, prices, imports, exports, market forecasts and international trends.

🌲 Compare markets. Identify suppliers. Monitor wood prices. Follow international wood trade.

WoodBusinessPortal.com connects professionals across the global wood supply chain - from forestry and sawmills to panel manufacturers, timber traders, furniture producers and distributors.