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MDF Supply Increases, Discounts on the Roll

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With increasing supply of MDF, the domestic market is hotting up with new offers from sellers. The increasing competition is visible in markets as the frequency of discounts, offerings and schemes is visibly gaining frequency. The pricing discounts in each thickness category is becoming an essential tool which will certainly impact plywood prices in few particular categories where cheap MDF might displace plywood. The recent inputs from different region find that customers’ movement is likely to boost due to such offerings by producers and suppliers. The Ply Reporter found that primary MDF demand during October and November was comfortable due to schemes. During August and September there was an inventory build up at various levels that led to discount offering for volume loads.

The market traders said that increasing supply of MDF from domestic producers and import will further lead to fierce competition in the market resultantly suppliers will be compelled to reduce the prices in terms of different discount models. The rise in price of timber, phenol and formaldehyde to further elevation in scheme offerings looks difficult said a representative from MDF manufacturing company in India. Despite slowdown, the companies have managed their revenue growth during last two quarters but the present situation is creating a pressure indicate the present scenario.

Manufacturers are of view that reduction of GST from 28 to 18 % has brought hope for better demand in woodworking and furniture segment and anticipate increase in material lifting in coming days. The demand from real estate sectors and retail as well is expected to increase which will enhance the market to further level.

Currently there are around 2500 cbm of MDF installed capacity and expected to be doubled in couple of years. A considerable amount of import of over Rs 500 crore/annum is an addition to that. Producers and suppliers are expecting that this product will replace some of the portion of cheaper grade plywood in future and accordingly moving ahead but they are sure that it will take time.

 

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