Rising Raw Materials; Acid Test For SMEs - Pragat Dvivedi, Founder Editor

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Its havoc caused by raw material uncertainty today. With no relief in sight any time soon, the crisis has pushed away recovery hopes for this FY as well as of 1st quarter of 2021-22. The scenario is highly stressful for ply-lam producers who have literally stopped taking orders. It’s an acid test for manufacturers to sustain and keep supplying to markets. The Raw Materials cost for laminates manufacturing has reached to a level, where half of the HPL factories have decided to shut down. In February, laminate plants operated at merely 60% capacity. In March, it is hardly looking to touch at 40% for SME sector. With almost no sight of smooth availability in Melamine, print base and craft paper as well as other key materials; the laminate industry has already announced two consecutive price increments in just 45 days as on 20th Feb.

The laminate manufacturers are no more accepting orders of liner, door skins or lower thicknesses. A third announcement of price increase is set to be announced in 1st week of March which will be again around Rs 45 in 1.0 mm, 35 in 0.8 followed by 25 in liners. So far the laminate makers of semi-organised segment have announced a cumulative price increase of Rs 85 to 100 on 1.0 mm. The scenario is certainly pointing further for an inevitable 4th price increase.

The organised brands have increased around Rs 80/sheet in 1.0 mm, further to which a 2nd price increase announcement is on cards. Phenol, Formaldehyde, Paper, Melamine, Tissue, Craft etc have climbed to unstable levels where there is no surety for next hour

In Plywood too, the Face veneers prices have doubled post Myanmar military coup. The uncertainty surrounding sea freight is making the scene worse. All chemicals are beyond reach with timber prices up by Rs 150/mt. in 45 days. The PVC mica, edge band, ACP, each product category is ripped off with unstable scenario, and instability in supplies. The PVC resin, Chemical compounds, all kinds of raw materials including aluminium and wood are sharply high and scarce.

In such times, it is not only factories who suffer. Wholesalers and importers too face the burnt. In particle board and MDF, importers have been bleeding with no business where as face veneer and chemical importers are caught off guard. This is when entrepreneurs’ are tested for their skills and leadership.

 

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