The month of May was cruel and slow. The treachery of Covid has resulted in loss of lives and loss of businesses. It has given only pain, unemployment and crisis apart from losing our plans once again. The money cycle is badly hit in almost every sector related to WBI, because there was hardly any movement During May. With around 30% work in May and 45% till writing this thought note, payments are at half of the normal whereas orders are floating at 60% in all product categories.
The fast-moving items like MDF and Particle Boards too are slogging. The ongoing projects are moving but no new work is adding to sluggishness. Mean time the raw materials have shown a liberal side with slight stable timber prices. The Kraft paper and Base paper have eased up HPL manufacturers but Melamine and Formaldehyde are playing spoil sports for laminate, plywood and Particle board manufacturers. The raw material supply front looks stable as of now but it is all depending upon when will markets pick up. I anticipate a smoother roll from the mid of August.
The month of July is expected to be speedy recovery especially in its second half. The opening of southern India will flare up the demand cycle which will help the payment flow among industries. Currently the entire value chain and premium retail is affected thus there are heavy pressure on margin front for every stakeholder. The decorative veneer segment is moving very slowly where as premium laminate category is expected to pick up in July and catch-up pace in August.
The plywood manufacturers are better placed in June with 55 to 60 % of normal demand but are better than laminate manufacturers who are design and range driven. The demand for liner laminates too are at 60 to 70 percent of the usual demand but is expected to touch normal in the mid of July. Weak demand and low Kraft prices are keeping the liner laminate prices under check as of now. The scenario looks full of pressure till mid-August with respect to payment and demand. The Melamine and base paper prices are also stable thus indicating a balanced time in HPL on Raw material front.
The present scenario in face veneer is tight but many factories are sitting with decent stock so prices are expected to be stable. Supplies from Myanmar, Indonesia and Gabon before April were decent that is why the present markets are at ease. Overall, there is a hope that demands will be back during July mid but I feel there will a little more delay in few categories. Payments are tough to get, Although the extreme payment pressure from Raw Material suppliers is forcing mid segment manufacturers as well as distributors to borrow and put money in working capital. Those who will dare to invest at sharp curves like this, will surely reap the benefits later. It’s time to refill the fuel tank, Infuse Capital to gain speed because Covid 2.0 has pushed the destination far away.
Stay Good, Confident and with clear intent, happy reading