MDF board is the fastest growing wood panel products in India scene. Be it manufacturing capacity or demand growth, MDF has expanded and penetrated its presence in every region. Before ‘Green Panel Max’ manufacturing unit in Rudrapur, India had merely 400 cbm installed production capacity, which has crossed almost to 5000 cbm in 2019.
Such a robust growth has been based upon a perception built among Industry leaders that MDF will slowly replace plywood. The Ply Reporter’s this cover story is an effort to estimate that MDF growth is organic or is it really replacing something? Is MDF growth happening in manufacturing capacity only or the demand growth is also complementing? The effort is to dig deep to find ‘How far will the MDF growth story go?’ A market based views and findings below...
MDF: PRESENT MARKET SCENARIO
Analysing the trends during first five months, from April to August 2019, the MDF demand has sustained and stabilised in Indian market. The MDF brands, domestic manufacturers are breathing some air of relief because of improvement in demand as well as in prices. Comparing the last two quarters of previous financial years, MDF demand has improved, though August was a bit slow due to rainy season. The forecast, market sentiments and supply hinting that ‘MDF demand will grow further during third and fourth quarter of current financial year.
Amidst growing manufacturing capacities, three new MDF manufacturing units are ready to commence its commercial production this year. Despite that, the MDF manufacturing companies are a bit relieved because of upward momentum being noted in their rate of lifting after almost 8-9 months. The distributors across the country are also of the view that a positive outlook for MDF is visible, thanks to rising movement and new applications coming in from many projects and other sectors.
Last Financial year, witnessed a flood of MDF supply and weak demands leading to price war because there have been sudden supply jump coming from three new production lines of Action Tesa in Rudrapur; Green Panelmax in Andhra Pradesh and Century ply in Punjab. The three big brands, other old plants and imports together flooded the India market MDF scene with quantity loads, schemes and ambitious stockist appointment programmes, that fuelled the material availability leading to crashing of prices. Later, the rise in raw material prices and negative impact on balance sheets brought every stakeholder to their responsible positions which is why the aggregate efficiency utilisation in MDF manufacturing in the country is near 50 to 55%. The reports from manufacturing sector indicate an increase in capacity utilization by 15 to 20 % during last five months.
It is also true that ‘price war directly impacted the imports market share’ and pushed it to back foot. The aggressive posture by Indian producers, deterred the imported to book big numbers in MDF containers that ultimately snatched some part of import share to domestic MDF manufacturer kitty.
The Century Ply’s MDF plant has improved CENTURY PROWUD position as the company is making efforts to reaching out to every trusted and potential dealer ‘Century Ply’. The Century ProwudMDF panel has gained the confidence of dealers on quality front along with brand image which has helped its demand growth. On the other side, the ‘GreenPanel MDF, an established product, based on German plant quality has gained from proximity to south India market helped by strategic pricemove offerings to big import-based buyers and bringing them in to Green Panel MDF folio.
The strongly placed popular brand, Action Tesa MDF, too has noticed an upward curve in demand, thanks to rising prices in cheap plywood segment. Action Tesa plant has MDF manufacturing capacity of around 1500 cbm which is said to be utilizing its 70 percent capacity during last 5 months. The HDHMR Action Tesa’s MDF panel is a super hit and hugely accepted product across the country is notably helping the brand expansion, leading to market growth during last one year.
Mr. Vikas Marwah said, “If we see in 2009 when Green panel started their MDF operation, the market size in India was 3 lac 60 thousand cbm per year and today the capacity is almost 18.50 lac cbm per year. India has grown by nearly 500% growth in MDF segment and I believe in another six to seven years, this will be almost double of the present capacity making a better prospect for MDF. Future looks good. Educating the customers is going to play a big role in MDF uses.
Mr Awtar Singh Bhullar of ‘Century Prowud’ is very optimistic about MDF future growth says, “In international market, MDF is used in furniture manufacturing to the extent of 90% and in India we use only up to 15%. So, we have lot of scope, and market is changing very fast, Plywood and wood now a day is getting costly. The raw material availability is a burning question, so the market dynamics are changing and people are using more MDF. It is also because MDF is cheaper as well as comes with better finishing and help a furniture maker to obtain great workmanship and finish.
Mr. Mukesh Gupta of
Action Tesa said, “With increasing urbanization demand for ready-made furniture, manufactured with engineered panels like MDF, HDHMR mdf boards & Particle Board, is rapidly growing. The consumers are increasingly finding themselves short on time and feel inconvenience to get customized furniture fabricated by carpenters that is helping MDF boards acceptance. Affordable housing and ready-to-move-in offices/retail outlets, with modular furniture & Kitchens is paving the way for our value-added products namely HDHMR Boards, Pre-laminated MDF boards, laminated flooring, UV coated boards and exterior Grade MDF boards which adds flavour to ones interiors life style at an affordable cost. Today’s interior infrastructure industry is moving towards value addition, which is an indication of potential growth driver for value added MDF products.”
The Ply Reporter findings are in similar direction but there are many reservations found at dealers level when we talk of ‘MDF replacing plywood” question.
AT PRESENT MDF HAS AN EDGE, UNDOUBTEDLY…
The compiled view aggregate find the fact ‘that the MDF demand will improve slowly but the present high capacity build up will take another two to three years to accommodate’. It also finds that, strengthening prices of cheap grade plywood due to increasing prices of Poplar timber in North India shall extend certain benefits to MDF manufacturers in India. The price gap between economical grade plywood and MDF will widen that will help MDF growth.
The negative side is, despite overcapacity that, the capacity addition in MDF segment is continuing. With four new ‘mid size plants’ that are supposed to commence their production by next year where 2 big size plant of 600 CBM each are expected to join the play in next two years.
The Ply reporter findings noticed a drop-in growth rate of MDF during 2018-19 compared to previous year based on market demand and secondary liftings. The main reason is bigger base effect, over supply, slowdown sentiments on every items. The Ply Reporter sense, that ‘from here on, MDF market will see a gradual rise in demand and capacity utilaisation till Eucalyptus prices start climbing sharply. In brief it is true that MDF Industry coming on positive side after a long gap of two years thanks to demand.
WHAT DO YOU FEEL… mails us to firstname.lastname@example.org
MDF prices touched bottom in the beginning of this years, due to oversupply, during that, plywood price was also economical. MDF producers’ difficulties eased only when prices of Poplar started increasing. There is common feeling among MDF, PB producers that ‘MDF is replacing plywood due to rising price of plywood’. Another impact felt among the people is good acceptance of HDHMR Boards in residential applications. Mr MukeshGupta of Action teas says, it is replacing Plywood at a much faster pace because of it’s value for money. HDHMR is not only tougher than plywood but also highly moisture resistance in extreme moist climatic conditions. With Borer & Termite resistant and uniform density feature and made from special German Technology, that offer best routing characteristics.
Mr. Ritesh from Vishal Plywood, Bangalore says that technically MDF is replacing plywood, but that is not the case. Both are separate markets and MDF is creating its own ground according to its uses and applications. MDF sales have grown due to OEMs and increasing demand of readymade furniture on the other hand there is no impact on plywood sales due to it. We cannot say it is replacement of plywood due to MDF. Where as Mr. Narendra Bafna of Bafna Agencies, Indore says that MDF is the substitute of plywood and now HDHMR is taking its place. Due to costing factor MDF users have increased. In my opinion it must have captured nearly 30% area where plywood was used earlier.
Mr Naveen Poddar of Shyam Plywood, Bangalore opines that MDF has higher penetration in 6mm plywood market but now it is also not the choice. In some part of the country where ever there is higher penetration of MDF must be a new market. We are witnessing higher demand of plywood. I would like to suggest plywood manufacturers to focus on calibration because this is also one of the reason people are using MDF in furniture making for better finish and faster output.
Mr. Ritesh Patel, Gayatri Plywood, Hyderabad says that there is no comparison with plywood as MDF has its own market and applications. Plywood demand is there in most of the regions in the country due to its unique proposition. Now a day the demand of MDF is not at that pace and also there is not good perception among carpenters regarding its durability. The economic range of readymade furniture manufacturers are opting MDF. The dealers are also not willing to promote due to margin factor. In certain part of the Andhra Pradesh such as in Rayalaseema, Guntur etc MDF uses are still high but in cities like Hyderabad, retail outlets are not able to sell MDF.
Mr. Sanjay Agarwal of Sai Plywood, Hyderabad says that the acceptance of MDF is increasing but plywood has its own market. The reason behind increasing the market of MDF is its workability, cost-effectiveness and emergence of innovative DECO paint. People are much interested in readymade furniture. In our traditional culture of demanding durability, the acceptance of MDF will definitely come but slow. We can observe 30 to 40 % share change in coming four to five years.
Mr. Satyanarayan Khemka of Khemka Timbers and Plywoods, Chennai says that people are adopting machines for furniture manufacturing as the customers interests are now moving towards readymade furniture. In south region even carpenters are using MDF in larger quantity. According to me in Madurai region nearly 20% MDF material would be used in furniture making by carpenters and in modular segment approximately 70 percent MDF is being used. The manufacturers observe it easy to work on MDF and got faster and nearly 30% cost effective manufacturing of goods.
Mr. Rakesh Mehta, Mahavir Laminates, Coimbatore says that with increasing use of machines for furniture manufacturing the uses of MDF is increasing due to its calibration and easy workability with perfection in alignment of panels during making furniture. Its high density product like HDHMR is also eating the market of plywood breaking its strength factor. In 18 mm and 8mm pre-laminated MDF and HDHMR sales is increasing which is actually replacing the plywood uses for that specific purpose. MDF is making in road itself and increasing its market base. The price factor of both is also supporting the growth of MDF as the branded plywood has reached to Rs 100/- while MDF is available on Rs 60/-.
Contrary to that Mr Praveen Tekriwal of Shreeram sales, Kolkata says that MDF requirement and sales are increasing but the plywood sale is no where affected due to MDF. Both the segments are different and their application areas too are different, such as MDF is used for the places where strength is not required like wall panelling, cladding, interior decorating, photo framing but plywood is used in doors and furniture making and even in structural uses.
In eastern region MDF sales are low and mostly used in photo framing purpose and some part of furniture making in which low thickness is used. Secondly people still are involved in traditional practices and most of the furniture work is getting done at their home by carpenters.
Mr. Mukesh Jain of Mahavir Enterprises, Chennai opines that Plywood being costly the demand of MDF has increased a lot and it will also increase ahead because it is easy to application, cost effective and gives better finish than a general plywood panel. The plywood industry is also responsible for it as what they commit does not comes in delivery in terms of thickness and quality of material. The uneven thickness also disturbs the machine operation so the furniture manufacturers prefer MDF in place of plywood. As of now there are nearly 10 to 15% penetrations but in coming days its share will definitely increase. But, with emergence of calibrated plywood, the furniture manufacturers are comfortable using it and giving production with precision.
MDF TAKING ON PLYWOOD BUT …
The Ply Reporter finds that MDF will definitely take a significant share of cheaper grade plywood market with increasing trend of readymade furniture. Moisture Resistant Grade MDF will also take some share of good quality mid segment plywood that are currently used in shutters and wardrobe. But seeing market behaviour and culture as well as dealers and carpenters inclinations towards plywood, the road is not much smooth for MDF, however if MDF would able to take just 5 to 10 percent of economical grade plywood, probably the present hunger of MDF plant capacities will be met good enough.
MDF Impact on Thin Plywood,
With increasing raw material prices, plywood factories in India cannot offer thin grade plywood mainly of 4-6 mm thicknesses, hence its prices have gone high, which is giving scope to MDF to cater these segment demand.
Mr. Hemraj Jain of Bhandari Agency, Hyderabad says in place of thin plywood like 4 to 6mm, MDF is filling the gap because the plywood is not able to match the price or at supply front due to its increasing manufacturing cost. Manufacturing 4mm plywood is not viable due to increasing cost of Core and Face veneer and thin MDF volumes are very high in many areas where Indian plywood can neither match quality or quantity.
Mr Hemraj adds that ‘MDF do not pose any challenge to higher thickness of ply and whatever it is currently gaining, itsonly a little that too due to marketing and organised working model of MDF companies. Mr. Narendra Bafna says that the demand of MDF is more in 1.9 to 8mm thickness, in photo framing 1.9 to 5mm is used where as 5mm and above is used in decorative panelling. The availability of advance CNC machines offers carving, designing, making Jali of MDF with proper finish that use higher thicknesses.
Mr Vikash Marwah says that the thin plywood is virtually out of the market, so up to 6mm we could rarely find people using plywood and this segment has been converted into MDF. Gradually, we can find lot of application in 8mm and 10mm, which people are shifting to MDF. There is a segment of higher thickness like 18mm and 25mm, this is partially happening. Some people have started using HDF in kitchen carcases and lot of other applications. The Club grade of Green Panel has done really wonderful in this. While Mr Bhullar says It’s not about a particular thickness of plywood which is affected with MDF but the 6 to 8mm plywood has been replaced by MDF.
Mr Mukesh Gupta views that almost in all the higher thicknesses starting from 12mm and above MDF is replacing plywood. Major reasons are being ready to use panel, best suited for 3D Engraving, Paint & Polish, cost saving in terms of raw material prices, labour charges, better physical properties etc. Major challenges are being posed by players who are offering low quality MDF at a lower price which is really very painful because ultimately it tarnishes the product image in the mind of end consumer.
Mr. Bhavesh Shah, Jain Plywood, Chennai feels that in lower thicknesses like 4 to 6 mm, plywood is witnessing more replacement as the quality standard and pricing is not good in ndia. As far as thicker plywood is concerned I think both the plywood industry and MDF will be a parallel market adds Bhavesh.
Mr. Vivek Dhanuka from Aurangabad views that MDF is mostly used in photo framing and partition in western part of the country. It is also used in designing, covering and interior applications. Those who are using DECO paint; this is a big segment and uses MDF in large scale.
There is no challenge for higher thickness as if the price continuously raises people will have no choice. MDF segment also have not adopted the effective marketing to make aware of the contractors and carpenters to use it in purposes other than photo framing and partition or interior decorative applications.
Mr Aditya Tulsian of Novel Ply, Odisha says ‘MDF is penetrating in eastern region butvery slowly as there are traditional practices prevailing. The potential towns in which people are talking out of contractors or architects services are witnessing more use of MDF but in rural area its uses are limited to photo framing and other such purposes. Laminated MDF is more in use in partition, wall panelling, ceilings and even in panelling in aluminium partitions. Plywood is a common interior building material which is still the first choice but its price and for specific uses where the strength is not required it sometime offers the space to use other panel products.
IN NEXT 5 YEARS ‘MDF CAN HAVE SOME MORE SHARE BUT 85% WILL REMAIN TO PLY
The purpose behind the recent survey on growing MDF application over plywood, is to make the industry and trade aware about the actual fact. The report clearly indicates that MDF consumption is growing due to its versatile application, workability and growing trend of making furniture with automatic &CNC machines. MDF has definitely taken over the market share of plywood in thin segment such as 4 mm and 6 mm but penetration in thicknesses above 8 mm is not significant.
The offering of Moisture Resistant Grade MDF by domestic producers are another advantage over plywood, but the reluctance among dealers in selling MDF exist due to poor profitability. Undoubtedly plywood leads far ahead compared to any panel product in race and stand as first choice for carpenters, furniture makers and unorganised residential sector and trade community.
The market of MDF is growing but it is largely growing in surfacing and panelling uses, due to its smooth surface and uniform thickness. To match the future collision or prevent MDF dominance, Plywood people have to deal in good quality, calibrated plywood. Time for only Calibrated good quality plywood offering is not far. According to estimates, value wise, MDF is merely 8% of total plywood market size in 2019, finds Ply reporter & BSMR analysis reports.
(Conclusion made in the above article is on the basis of 379 respondents, interviewed in person, over mail, phone and other mode of communication, on next 5 year horizon possibilities )