Ply-Boards Demand Contracts by 50 Percent in July

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The demands of wood panel and decorative products were badly hit in July attributed from doubts, absence of customers, GST compliance confusions etc. According to Ply Reporter market findings lifting of entire product category of wood panel decorative hardware trade has nosedived. Various markets have witnessed a demand contraction between 50-60 percent. The smaller cities have faced the most serious drop where reports indicate that market has become very very low even going down by two third. The first 2 weeks in July were just about GST and new price lists. During second fortnight, the market crawled back to some movement with the clarity on new prices announced by the manufacturing companies.

In flood hit states e.g Assam, Rajasthan and Gujarat are still undergoing through logistic disturbances in many of its geographical areas hitting rural market to the lowest. Transit of materials is still affected due to heavy rain and water logging on roads and highways. Hope of GST coming down has also retarded the demand from many quarters lifting of ply-boards and doors. Many dealers are still cautious about GST slab change announcement and hence very hesitant in giving orders. Almost 90 percent of the producers have passed on the complete GST to next level that has created a sudden load of 28 percent extra payments in immediate time frame that has further added to pressure on demand and ply board consumption. Only the sites which are either full input claimants or they can’t stop any further were seen making purchases during July.

Adding fire to the issue in July contraction was strike in Haryana that continued for 4 days continuously. The strike was called for GST reduction on plywood and abolition of Mandi tax on timber, which was supported by many states such as Punjab, UP, Uttarakhand, Rajasthan, Bihar etc. The effect of such a massive scale strike was phenomenal in terms of sentiment and people began expecting some result hence again postponing their orders. Plywood production witnessed a drop by 50 % on an average in SME’s sector. MSME units were reportedly operating on few points above where as organised players reported to have been operating on similar levels that was prior to GST. Many of the customers were seen matching prices of different brands and postponing the decision to buy for a few weeks. According to experts market cannot hold more and can start accepting the new prices as they can’t afford to loose their customers. It is expected that market will regain momentum in AUGUST if some new announcement on GST slab is not made.

 

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