The Ply Reporter believes that "knowledge is the new currency" and is always on the lookout for relevant information to share with the industry fraternity and educate them on how to make sound decisions. The availability and price of timber were discussed in this second episode of SAWAL BAJAR KE, along with the laminate industry's scenario, particularly in terms of price, the growth prospects of the PVC laminate industry, the pressure on acrylic laminates due to oversupply, and where decorative veneer ranks among the highlighters category in wood panel decorative industry. SAWAL BAJAR KE is an initiative by the Ply Reporter based on the queries that come to the magazine and the solutions given by the industry experts. The programme held on 15th January, 2023 was powered by Advance Laminate. The company's manufacturing plant is located in Hapur, Delhi NCR. They offer a wide range of PVC laminates, paper laminates, and acrylic laminates. They offer laminate sheets ranging from Rs 500 to Rs 5000/sheet. Here is a brief on the discussion among Mr Pragath Dvivedi, Founder, IIR (India Interior Retailing), and Mr Rajiv Parashar, Editor, Ply Reporter.
Q. Timber is important for the wood panel industries like plywood, MDF, particle board, etc. But, the entire industry across the country has been jolted by the spike in the price of timber previously. Do you think it will go down in the near future?
In the last episode, it was said that after a fortnight, the improvement in the market would begin to appear. As you are aware, the market has been slow since November 2022, and the payment scenario is also unfavourable. I am still sure that slowly the market will move ahead, although spending is still tight because the lower middle class is still facing challenges due to the rising inflation in retail in the past few months. Undoubtedly their spending on interior work has been postponed. But, the good thing is that they do not entirely negate their spending, so the market improvement is sure to come compared to the previous months.
No doubt, timber is at an all-time high. In UP, the price of eucalyptus has crossed Rs 800, due to which its viability is zero for the industry. The price of timber is directly related to plantations, and plantations will increase if farmers or planters see profit in plantations. If we observe, we can see the demand for timber has risen all of a sudden due to the emergence of more particle board and MDF manufacturing units. Neither the farmers, nursery owners, nor the industrialists themselves had the foresight to expect such a high demand for timber in the wood panel industry in India.
The current scenario indicates that 2023 will be harder for the industry players, as the same situation is going to arise for the industry based in the South region as well. Last year, the timber price was within limits in the South, but the North saw an unbearable spike in the price. The estimate indicates the price of timber will rise by nearly 25% in the South as well. The northern region-based timber price is already high and may remain so for the first half of this year.
I hope the price easing will begin in the second half of 2023. The Punjab and Haryana will witness considerably good quantity of timber availability because, since the last three years, there has been a lot of timber plantation in these two states. By the end of this year, the ease of pricing in the north will be reflected in the market. On the other hand, over the next three years, followed by this year, the timber scenario will be tougher in the South. It is recommended that the industry and planters pursue plantations at a rapid pace in the southern region also.
In UP, the situation is different because the region has seen a price increase this year. Two years ago, the timber price was in the range of Rs 400 to Rs 450; today, it is at Rs 800, and by next year, it could approach Rs 900 because the region's plantation speed is not at the previous rate that can meet consumption. In the year 2024, the price starts to come down as the farmers have begun planting in this region also.
Q.Do you think that the entire laminate segment has witnessed a drop in demand and sales due to which the price has come down, or is the scenario limited to balancing laminates?
When we talk about the price of laminate, it means it is being talked about as a lower-thickness laminate because in the branded category or the value added products in the laminate category, price fluctuations are not seen frequently. However, the price has dropped by Rs 30 to Rs 40 for the liner grade and lower thickness range.
Q. The PVC laminate industry observed fast growth, and in five to six years, over 30 manufacturers entered this new product segment. It has suddenly reached a standstill in 2022. What could be its driving factors?
Indian consumers are different and diversified. They get attracted to low-priced products in search of cost effectiveness, and at the same pace, they move toward quality if they are unsatisfied with the previous one. You can relate with motorbikes or watches; the budget used to be Rs 400 but has reached Rs 2500 now in watches, and a similar situation happened in motorbikes when people were hesitant to spend Rs 70,000 but is spending 2 to 2.5 lakhs now. The same situation lies in the wood panel decorative industry as well. The glazy designs were offered in PVC because such designs and sparkles were not available in the market anywhere in any product, and once a good quality product like acrylic was made available with all those designs, the urban population's preference shifted towards acrylic. Undoubtedly, acrylic is better than PVC laminate.
If we talk about small towns and rural areas, there is no workmanship for acrylic laminates, as they need machinebased applications. And after adoption, contractors and carpenters bounce back to other decorative items from acrylic laminate if they used it by hand application. They invite lots of complaints regarding bubbles and other issues if applied manually. Previously, the same complaint could be found in PVC laminate also. But, after innovation PVC laminate has several advantages now: first, it is flexible; second, carpenters can manually apply it; and third, it is a low-cost product that can be purchased for less than Rs 2000.
Acrylic laminate, on the other hand, starts at Rs 4000 per sheet. So, the players who are targeting rural areas and small towns and ensuring the availability of the product; are observing that the market is expanding. And if they wait and watch for a correction in their existing market in big cities, they will have to wait a long time, because there is a lot of competition from other decorative products, and acrylic laminate is one of them.
Q. Acrylic laminate and louvers prices have dropped with rising competition and availability. In this situation, what should retailers do?
There is a lot of scope for retailers in India. If we talk about their contribution to the growth of the wood panel industry, they are the backbone of the industry. Also, they are overcrowded now with the increasing number of shops in every city. However, how many of them are truly knowledgeable about the products and can explain them to their customers? The number of such retailers is still very low. Among this crowd, only 15% of the retailers understand it and sell it wholeheartedly, and they are getting good sales. They have no doubts about their ability to grow in competition.
If any product moves forward, its supply increases with acceptance in the market. As a result of the rising demand for louvres and highlighters, the entire importer fraternity and many domestic players concentrated on it, causing the supply to increase and the extra cushion of margin to drip. One of the reasons for the price drop in louvres is their quality deterioration.
Now the product is available with less thickness. But, the players who offered good quality with sturdiness and maintained their thickness did not drop their pieces too much. The low thickness and cheaper quality show waviness after application that is hitting the segment. If the retailers understand it, take it forward, and discuss it with their customers, the customers will not hesitate to spend more for quality because they make homes once in a lifetime.
Q.The veneer industry has driven the showroom culture in the country in the wood panel segment. We would like to know where veneer stands in this decorative surface product segment now?
Veneer is an evergreen product in the wood panel decorative industry. For example, you can observe changes in every surface decorative product, its availability, and boredom among the users that may affect its demand and supply as well. But veneer is a product where the manufacturers, traders, and retailers are moving at the same pace with patience. The Ply Reporter's observation indicates that in 2023 the segment will see steep growth.
Our study says that in the past year, large flats, houses, resorts, and villas have sold at a record high level, and land registration was also high. The trend is still continuing in cities, where three-bedroom and larger apartments are selling quickly. The sales of premium condominiums have risen. This segment of people is very conscious about aesthetics and being close to nature, so definitely use veneer, at least in a room or living room. It indicates that the demand for veneer sales will definitely rise at a fast pace in the middle of 2023.
Despite the fact that veneer is the driving force behind the country's showroom culture in wood panel and decorative industry, the number of veneer showrooms has not increased to the same extent as highlighter showrooms. The study indicates that the trend will move towards veneer, the crowd in the highlighters and louvers segment will definitely turn towards veneer, and the showrooms for veneer display and its applications will begin to rise after mid-year 2023.
The innovation in veneer will also help the segment as its louvers have come onto the market, so the next financial year will definitely be for the veneer louvers as well, and veneer will perform well in coming times. Retailers are encouraged to expand their initiatives and activities into the veneer segment as well, as there is a lot of opportunity in this segment.
TAE AWAYK
- The price of timber will rise in the South in the coming financial year. On the other hand, Haryana and Punjab will see some softness in the price of poplar. The price rise in UP would be challenging for them, so they are not able to expect the price drop in the near future.
- Although the price of economical grade laminate has decreased, the price of good quality laminate has not decreased because they have worked on innovation, designs, and quality.
- The future of PVC laminate is bright only if it is taken care of and focuses on different market segments. The manufacturers and traders have been advised to rework their plans for its growth.
- In louvers, the quality deterioration with supply increases has hit the segment and there is a price drop, so a retailer should focus on quality products as the quality segment is still moving along at a good pace and in the future will also be good for them. The price of acrylic laminate has dropped as a lot of materials have been imported.
- The next financial year is bright for the decorative veneer industry. The retailers, who have previously shifted to other highlighters under-minding veneer, should reconsider their strategy