In a series of successful webinars during this challenging Covid time, the PLY REPORTER organized another brainstorming E-conclave on ‘Face Veneer: Rang, Bazar & Emerging Needs’, onthe 30th Aug, 2020. The conclave was addressed by Face Veneer manufacturers, traders and technical experts such as Mr Sudeep Jain, Director, Greenply Gabon SA; Mr Alok Agarwal, Director, Woodland Gabon Sarl & Landmark Veneer Pvt Ltd; Mr Aman Garg, Director, Everest Ply and Veneers Pvt Ltd; Mr Arwinder Singh, Director, M. K. Enterprises, Ludhiana; Mr Sant Kwatra, Director, Trimurty Veneers, Yamunanagar; Mr Anup Agarwal, Director, Gabon Timber Industry (Malchand & Sons Group); Mr Vivek Agarwal, Director, Timber Works; Mr Raghav Goel, Promoter, Gabon Veneer SARL and Dr S K Nath, Ex Joint Director,IPIRTI. Mr Pragath Dvivedi, Founder, Ply Reporter and Mr Rajiv Parashar, Editor, Ply Reporter moderated the discussion.
This e-conclave was powered by Gabon SEZ SA, the joint venture of Gabonese Republic, AFC and Olam-Singapore. They developed a SEZ, spread over 1,126 ha at Nkok (27 Km from the capital city of Libreville). It is one of the largest industrial park in sub-Saharan Africa, focused on sustainable production/processing of timber & other natural resources of Gabon.
The panelists addressed many issues and challenges related to Face Veneer availability, its sustainable pricing, reasonable thickness and emerging need of the plywood industry. The exerpts are as follow.
DEMAND AND SUPPLY POST COVID
MR. AMAN GARG: There was a lot of stock before COVID-19, which were exhausting and liquidating slowly in the country in the month of May-June. The transit time from Gabon was 45 days which has increased as there is a scarcity of availability of containers at Gabon. However, the supply of Gurjan from Burma is comfortable in terms of volume in the market, but in terms of price Okoume face veneer is picking up.
MR. ALOK AGARWAL: Ever since, the industry has picked up pace in India, a month later after UNLOCK, the sudden demand of face veneer has picked up and the stocked veneer has been getting exhausted. This is also true that the transit time from Burma is less, but the issue is that the timber is old, but we have still managed to reach to 75% sales as compared to pre-covid level.
MR. SUDEEP JAIN: In Gabon, the timber price has not increased in the last four months and consumption is at 35% of total consumption previously. The timber supply till June was at 25% and started to pick up from July. So, the price rise is due to rising exchange rate of Euro which accounts to 7 to 8% approx. All factories at Gabon have started production now.
GURJAN V/S OKOUME FACE VENEER
MR SUDEEP JAIN: The perception of colour is still prevailing among the plywood manufacturers. There is price factor also, as presently they are using Gurjan at low prices. The transit time of supply from Burma and Gabon also matters as one take 40 days, the other 90 days respectively. But, when everything will be normal Okoume will be more in supply than Gurjan.
MR. SANT KWATRA: With lower price of Okoume people were switching over to it from Gurjan and acceptability had been increasing at a fast pace. Today the price factor is reverse and Gurjan price has come down everywhere. In my opinion, Gurjan will be the first choice always. The Gurjan price is going down because the material is getting deteriorated specially in D1 and D2 with demand supply imbalance. Okoume acceptability was due to lesser prices. In my opinion the Gurjan demand would be at 65% besides other locally available species like Makai, Holong etc. if Gurjan price increases people will again shift to Okoume.
MR ALOK AGARWAL: Indonesia and Burma cannot supply 300 containers even together. In Indonesia loggers are making losses and this is not sustainable for them. If the demand increases the price of Gurjan has to increase. Today D1 and D2 are in plenty and getting damaged so they are observing desperate selling as it releases oil with time, but this is not the case with Okoume.
MR RAGHAV GOEL: Okoume has been a blessing for India. Every plywood manufacturer has costs in control because Okoume is available in the market. With its shortage, Gurjan price will shoot up and people will shift to Okoume. Those whowere manufacturing with Gurjan will slowly shifted to Okoume.
MR AMAN GARG: Prices will be stable for the time being; as the demand will increase the loggers will increase the prices too. So, the demand and supply will control the foreign currency and material price.
MR. ANUP AGARWAL: Indonesia price has no concern with Okoume supply/demand as this sector is entirely different and our customers are 100% Okoume dependent.
MR. SUDEEP JAIN: Many countries like Philippines, Malaysia, and Indonesia are still under lockdown, when covid condition improves the demand in these countries will increase and the supply to Indian market will automatically reduce, that’s why its price increase is inevitable. One year ago, they were also importing Okoume face veneer.
MR. VIVEK AGARWAL: This is a fact that the demand for face veneer is low due to COVID condition everywhere. Face and plywood manufacturing industries are interdependent. If the plywood manufacturers keep pushing the price point, the quality will deteriorate. So, beyond a particular level of price, manufacturers will not survive whether it is Indonesia, Burma or Gabon.
PRICES OF FACE VENEER
MR ARVINDER SINGH: The industry is improving better than expected, because when liquidity in the market increases, the production goes up, correspondingly the face veneer demand also increases. Still we expect that, coming to the pre-covid stage will take at least one year. Currently we are at 60/65%.
MR. ANUP AGAWAL: If we differentiate Keruing and Okoume, when clients buy face veneer, they ask for Keruing at 32 rather than Okoume at 17. It is not true tha the profitability of manufacturers is more due to the price of Keruing. In our press, 5% of people ask for Keruing and 95% Okoume, because it gives a smooth surface and there is no issue of releasing oil. In our operations, when we were using Keruing there were issues of oiling in stock in just three months and even in the delivery period it was a major issue. Due to that the quality gets deteriorated.
MR. AMAN GARG: Big brands have less fascination for Gurjan. But, the middle segment has the practice of making comparison based on the assumed superiority of Gurjan. Main reason is to take advantage in price by upto Rs 5. But, in D1 and D2 market, Okoume face veneer has taken over 100%..
MR. SANT KWATRA: Many leading companies promoted Okoume in place of Gurjan and took the advantage of price without decreasing the price of the product. Their acceptability will be there because they have set markets. But in UP, Yamunanagar and Punjab markets, there is a price difference of at least Rs 2 between Gurjan and Okoume. The face veneer industry heavily relied on traders, but Okoume is on direct selling today. If they offer through trader and the prices remain same, then traders will promote Okoume.
MR. PRAGATH DVIVEDI : So, it is clear now that price is the driving factor, but it will not be effective when quality comes in. If anyone needs good thickness and quality he will not go for colour and prefer Okoume, that’s why people are moving to Okoume.
MR. AMIT AGARWAL (PREMIUM PLYWOOD): Today, Okoume has been accepted in the market. Colour was not an issue so people accepted Okoume. With healthy competition, acceptability and importance of both prodcuts will be there in the market.
MR. RAGHAV GOEL: This is not true that Gabon started manufacturing 0.25 mm in all their facilities. This is done for particular cases, where some traders who ask for it. But, maximum are making 0.3mm, because all the facilities at Gabon have the option to export to other countries as well, such as in USA, Europe, South East Asia, etc.
The important factor for Indian consumer is that they are buying 100 % legal and sustainable face veneer. All the logs coming from Gabon are 100% legal, which may not the case when they are buying from Manipur or Indonesia. So, there is a lack of awareness also, that’s why they are not too concerned about legal issues. Price sustainability is a thing but, neither Gurjan nor Okoume price are sustainable, the present effect is due to corona. The workers issue is also there in Gabon but as the lockdown will be over, they will be back to the factories and again the prices will shoot up.
SUITABLE THICKNESS OF FACE VENEER
MR ALOK AGARWAL: The reduction in thickness of Gurjan started in 2018 when it went down to 0.28 mm and that was a failure, but 2019 onwards it increased everywhere whether it is Burma or Indonesia. The same will happen to Okoume as well; it is a matter of time. We cannot manufacture plywood with under thickness face veneer. With lower thickness, face strength is going to affect, but practically for 0.25 mm, the price difference in plywood cost is just 25 paise/ sqft. China is promoting 0.25 mm into India as a dumping ground.
DR. S K NATH: So far as the thickness of face of plywood is concerned, whatever is the quality, whether it is Holong, Gurjan or Keruing, the entire activity depends upon pricing. Starting from 1.2 to now 0.3mm at various face thicknesses, and also 0.25 sometimes for making commercial plywood. If you look at the quality of the plywood, two different stages of plywood depends on face veneer that the glue sear strength with the face and the core veneer and bonding strength. If the face veneer is less than 1 mm (0.6 mm below specially) the actual strength of plywood loses by 33% depending upon the veneer (this is with reference to BIS standard and actual data studied by IPIRTI) and the bonding strength even by using the Holong face (the best so far available in India) goes down by 20 to 25%.
Since last 75 years of history of plywood industry in India, all are pampering the customers with good looking face, it is not necessary, but in every plywood irrespective of grade or name like commercial or anything, face should be good. In commercial plywood, where there should be thicker face despite it being in general use. In structural plywood, we cannot simply use less than 1mm thickness. So, it is not necessary only for looking good. Do furniture manufacturers ask for 0.3mm or any other thickness face or that it should be uniformly thick? So, manufacture that which the customers actually demand. What happens is that a general customer gets attracted to colour and structure.
MR. SANT KWATRA: Whenever we were using 0.5mm thickness of face veneer, BIS was certifying us. Does it stand today as well when we have reached to 0.3mm? Industry is also thinking about bringing it to down to 0.2mm. Where will we survive as Gurjan has 6 grades and Okoume contain C-D and D2. Due to price factor they brought down to 0.25mm to adjust with Gurjan.
People also often have the practice to reduce the price by reducing the thickness of the face. In my observation of overseas markets, in many countries, somewhere there is no use of face and some are using even one side only, so without face there is no effect on the properties of the Plywood. When we use D3 face the property remains the same, but Indian market is such that they ask for A-grade face
MR. AMAN GARG: Intervention of Chinese factories from Gabon is a huge pressure on the Indian market because they are relentlessly trying to supply 0.25mm.
MR VIVEK AGARWAL: Due to over production at Gabon, there was pressure selling and by reducing thickness to 0.25 mm this segment is not giving stability to plywood.
MR SUDEEP JAIN: 0.25 mm will come and go back but we should even infact try to stop it because there are other manufacturers who cannot stop buying from China. When we go to these markets, we have to face competition with cheaper pricing and we have to compete with them.
MR. RAGHAV GOEL: For 0.25 mm, Plywood manufacturers are being pressurised. Even though, demand is not there, but only the traders asking for it, that is why Gabon manufacturers have been by-passing the traders and have started giving to factories directly. If India has to export for the European and US market, Okoume is truly sustainable option, being a legal face veneer. These countries are highly concerned about the legality of face.
MR. ARVINDER SINGH: Why don’t we think of recon, it will also promote ‘Make in India’ and help in avoiding China issues. Secondly, the thickness issue will be resolved. In this way local timber will be used, with desirable thickness and price. When Okoume came into picture, they also had to face resistance, but slowly gained acceptance, so can be with recon veneer.
CONCLUDING OPINION BY PANELISTS
MR. SUDEEP JAIN:-Okoume is sustainable and the government policies strongly support its sustainability. Sustainability will play a bigger role if we cater to international market and also increase the awareness in the country, Okoume is the answer to the sustainable availability of face veneer.
MR. ALOK AGARWAL:- Timber availability is very important and Gabon can offer legal timber at good price no so the future lies in Okoume only. Gurjan will stay but it will definitely gain the better share percent.
MR. RAGHAV GOEL:- All over the world whenever and whereever wood gets scarce, policy comes forward. This happened in Burma, Laos and Indonesia with the issue of logging. Okoume is the only viable option where the continuous availability. Amongst all Indian manufactures, 30 to 40% production should be shifted to Okoume. If by any chance tomorrow, Gurjan supply stops, what will happen to the market? So, everyone should have a setup in their market based on Okoume.
MR. ANUP AGARWAL: -Future is only Okoume and I request all the traders to stop buying from Chinese factories and support the Indians.
MR. AMAN GARG:- Industry should go on parallely, otherwise there will be imbalance in trade and in ones absence the other’s price will shoot up.
MR. VIVEK AGARWAL:- Sustainable, regular and bulk supply is possible only with Gabon. SEZ from Gabon is absolutely admirable. In a short span of four years, what we have created is incredible. This is also in the direction of self-reliance mission of the country as Indian’s in another country has set up a very good platform to feed our industry. The industry status depends on the industry itself, if they push to drop the thickness it can go down to even 0.20mm from currently 0.28. Ultimately, price and quality will work together. It depends on the plywood industry itself, how they keep aligned.
MR. ARWINDER SINGH:- Look-wise Gurjan is better than Okoume, so till the time, price of Gurjan will be affordable and constant to present level, it will go on for a long period of time. As a recon manufacturer, Okoume is the answer to all problems
MR. SANT KWATRA:- Okoume demand will be there forever and due to its presence, the Gurjan price will be on check and constant.
DR S K NATH: Face Veneer thickness, we cannot take back but the emerging recon veneer acceptance will be an added advantage to the industry. With the BIS, what I am doing at present on behalf of GreenPly is to study the actual manufacturing practices and standards in close association to support IPIRTI. Secondly, using total Indian wood, all plantation (TOF), and plywood can be made, fulfilling the need of the customers, also passed by BIS standard, which will be modified very soon. There is one technology we are trying to develop in a factory. This will come in future. Hopefully it will be successful.
MR. RAJIV PARASHAR - As the international policy changes, the change happens in the industry, we have seen at Burma and Laos. We expect that the policy support in Gabon will continue and we will be able to get sustainable timber from there in continuous manner. PLY REPORTER thanks GSEZ for supporting this cause to organize this informative webinar. Indians have invested in Gabon in large amounts and the continuous supply from there with good availability of logistics will prove its investment worth, supporting the domestic industry to have a good environment of product and supply of products nationally as well as at International front.
FINAL TAKE AWAYS BY PLY REPORTER
Price matters for sales and it is the only factor that lags behind the colour and emerging needs of face veneer, because the Indian traders want to sustain on price. If the plywood buyers/traders begin to give attention to quality even a little bit, not only the quality will improve but the customers trust will also increase on the product. In the last few years, the use of MDF and PB isgrowing due to grading down of the quality of plywood to some extent. The quality of plywood has downgraded to such extent where some of the MDF category claims that they are better than plywood and will be ahead in coming time as well, because the economy play a vital role.
In today’s webinar it is clear that the price generate everything, so plywood traders must ask some part of quality from the manufacturers, otherwise plywood itself become a matter of question. Secondly, whether it is Okoume or Gurjan, the discussion indicated that the buyer of Gurjan will be there forever. The market study also says that there are particular buyers and sellers who love Gurjan. The customers’ base has a habit to ask for Gurjan, so it sales costly among all. But, it would be relevant till it is in trend and so is the practice.
The panelist were agreed that today, Gurjan is affordable due to Okoume presence in the game. In the coming times, whenever we will talk about trend in quality, they will use higher thickness face veneer. It is also clear that if the Gurjan face veneer sales continue to this level of price that it is today, then Gurjan Face Veneer sales will continue for long, but it is also clear that with Covid vaccine likely to become available, the demand of Face veneer in other country will increase, the Gurjan face veneer availability will decrease in the country and Okoume face demand will increase once again.
Now colour is immaterial, so don’t play on it. Emerging need is to promote thickness and quality otherwise a sustainably available alternative will destroy the trade as well as the manufacturers. Sustainability, Agro forestry and the use of domestically produced products are much important factors in present context. It could be either bought in India or in Gabon, but buy Indian made and good quality product.
Another point of discussion was that manufacturers and peeling units should use indigenous species of wood like Lambu, Poplar, Melia Dubia and Eucalyptus and produce Reconstituted Veneer for Face Veneer purpose.