MDF segment is heating up with growing competition hence frequency of offering schemes and price corrections in every thickness category is beginning to show up. The target to sell larger volumes is creating a pressure on producers as well as distributors who are on anvil to maintain their growth. The recent market input suggests that MDF panel demand is considerably slow and companies are offering discounts and schemes to uphold the target. The Ply Reporter findings reveal MDF demand was weakened by 10-12 percent during August that pushed the sales teams to offer schemes in September to gain quick recovery. Resultantly sales in September month was better but the reason behind was greater discounts and schemes on volume loads.
According to the MDF dealers in Delhi, Ahmedabad, Bangalore and Pune, the impact of 28 percent GST on MDF is really causing an uncomfortable scenario at present. The producers are offering MDF with higher discounts but they are certainly not comfortable with the increasing raw material prices, competitive price scenario and greater capital involvement. The producers are informally hinting that growing MDF supply is adding to increase on wages, expenses and raw material prices where as prices of finished goods on decline.
It is noted that MDF production capacity is the fastest growing wood panel products in India. The country has reached around 2500 cbm of installed daily capacity and is trending towards doubling up within next two years. Import of MDF is also having a considerable size of approx Rs. 500 crores per annum. Although the application and usages of MDF are growing in India, and producers/suppliers feel that this product will replace some of the portion from cheap grade plywood in future but it will take a long time. The need of huge capital involvement and pressure on sales will be the biggest challenge for this sector in time to come.