When finished goods prices are needed to be increased, factory owners helplessly comment on the ‘non acceptance of new prices in market’. On the contrary, when raw materials prices rise, manufacturers do feel helpless to have a say or pass it on. How far and how deep is the impact when a manufacturer finds him helpless and surrounded by unprofitable and unviable circumstances? Is it just because, one has not created a mechanism of passing on the effect and has largely depended upon a limited network or it is unity among manufacturers that shall be in action? It is a known fact that ‘Demand & Supply’ defines prices and profitability. But is there something more to it?
The pricing in raw materials like phenol, melamine, methanol, and Kraft Paper apart from other logistic issues, delays and 3-fold rise in international freight rates cover’s almost everything of input cost in laminate, Prelam boards and MDF category. None of these have seen any relaxation or softening of prices during last 4 months, yet the net price impact is clearly visible in MDF and Particle board, Partially effective in laminates and hardly visible in Plywood. It is because, MDF category was able to implement almost together, Laminate segment implemented the price increase in parts. In plywood category, the message of price increase or passing on the raw material cost effect has not been announced and implemented together hence effect has been poor. The synchronised announcement by each factory together never happened because probably plywood segment is too fragmented to be in synch with each other. What is evident ‘If understanding and unity has been in place, plywood industry could have avoided the losses’ they are presently observing.
The increase in market share of wate resistant MDF is a fact but that is also because plywood industries have been compromising on quality and distributors have been acting only for easy money, not working enough with their marketing skills or selling good quality ethics. The factories are equally to blame, who offer cheap and duplicate BWR or MARINE grade by misusing ISI mark on it and don’t really care for a long term image or goodwill. The same will obviously happen in MDF too, where at after every 0.2 mm there is a new thickness category being introduced with more factories coming in the play. The same habit of ‘making ‘cheap and fast money’ among distributors and manufacturers, will carve the downside road, because somewhere probably, the industry and trade, like the kick of big Volumes and Top line numbers, instead of product goodwill and bottom line.
The new year 2021, is a year of hope and turnaround. I hope, in the beginning of the new Financial Year will not only bring down the raw material prices, but also grow the prospects of quality seeking distributors, good brands who offer ethics, quality and innovation and enhance the overall happiness quotient in every domain of wood panel industry business.
Happy New Year
Pragat Dvivedi Founder Editor
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