A method of processing lignocellulosic material includes the steps of comminuting the material to a size that it can be processed in a hydrothermal pressure vessel, drying the material in moving air to obtain a specific moisture content, packing the material into the vessel and subjecting the material within the vessel to steam under pressure, decompressing the vessel to return the temperature and pressure to ambient and drying the product to specific moisture content; the product so formed can be used for injection moulding or to form panel boards and the like.