California has imposed strict new rules on formaldehyde emissions from engineered woods (that's plywood, particle board, or medium-density fibreboard to you.)
These regulations essentially require manufacturers to buy new machines to meet the regulations and then get certified. For a while, only one or two board suppliers in China were certified as the new machinery costs a few hundred thousand US dollars, so you could not get accurate pricing for certified boards at the time.
During this period, customers would ask us if we were compliant and after checking out the requirements, it seemed as if E1 grade boards used for Europe would comply with the emissions aspect of the regulations, but not the paperwork aspect. That is to say an E1 grade board would pass the California emissions test, but since it was not "certified" by a third party, it would not have the right paperwork.
We figured using E1 grade boards would be a good approximation for pricing purposes. After all, how much could that "paperwork" represent as additional cost?
Looking at a quotation today for some furniture, the difference between using E1 grade MDF and California CARB-compliant MDF was about 5 - 10% at the FOB level for piece of furniture. It would add about US$ 15 - 20 to the retail price of a coffee table.
Keep in mind that E1 MDF absolutely complies with the actual emissions requirement. Its not that the California regulation is stricter. So here is my conclusion:
1. The supply of the California compliant boards is not yet large enough to match demand, hence the higher price which should fall closer to E1 grade pricing as more manfacturers come on board. (Note that E1 grade boards are more expensive than E2 grade, so there will still be some cost issues.)
2. The paperwork aspect is actually expensive. (I still don't get why you have to buy new machines if E1 will pass the testing requirement. Maybe the certifying companies are all American and require different machinery to comply. Who knows.)
Maybe these formaldehyde emissions are really dangerous and need to be regulated, but it sure seems wasteful to not just have adopted the European E1 standard.
I would suggest that the important part of these regulations should be the monitoring of actual shipments for compliance. I have heard too many stories where the sample is made with E1 boards to send out for testing, but the actual shipment is made using E2 boards. Imagine trying to be honest and competing against companies that did that!
