MDF Market Space: Price War Continues but Costlier Import Gives Room for Price Increase

person access_time3 05 July 2024

The Indian MDF industry is now witnessing a tough price competition as supply of MDF is presently much higher than market demands. The oversupply scenario has emerged after commencement of production at different locations. Century ply, Greenply, Action Tesa, Cross bond all four have started their lines during last 1 years adding up another 3500 cbm approximately to their already installed capacity. Apart from that Archidply, E3 group, Prominent Panels, Adler wood have added another 1100 cbm approximately to MDF installed capacity in merely one year. Over all the installed capacity has almost grown by around 50% resultantly during CY 24.

The demand for wood has also grown by the same percentage taking the timber cost rising from 25% up to even 35-40% in certain areas in MDF manufacturing. The imported MDF which started growing again post December has been consistently arriving in tune to an estimated volume of 1200 cbm every day. Now since Sea freight have pushed the MDF pricing up by another 7-8%, the Indian manufacturers are also exploring and weighing the price increase options.

As the oversupply of MDF in Indian market from all fronts surged by whopping 30-40% in few months, the market has witnessed a price correction of around 16- 20% for trade dealings. The price war brought down the earnings of every MDF manufacturing company which is clearly reflected in EBIDTA margins of all listed brands.

The MDF prices have further taken a hit during May end week following further spurt in domestic supplies thanks to starting of two new contiroll lines. The price correction was noted after significant capacity additions during month of March and April 2024. The price levels were also breached due to weak market demand coupled with rising inventories pile up. The MDF market is witnessing a Price fight especially among companies who have new plants and they are aiming to find their market space assertively. In order to scale up utilization and in order to achieve break-even sooner than later, the recent price drop is witnessed by 4-5% till making this article.

The newly established plant of Greenply has marketed aggressively initiating a tough competition to already existing players in MDF space during CY 23. The beginning of price war led to reactions from Vir, Green Panel, Century, Tesa and other brands.

The price fight has given space to Greenply MDF in MDF segment resultantly showing a strong Quarterly 4 FY24 revenue growth. Green ply has done well on MDF volume growth; with around 80% capacity utilisation within almost a years’ time. On the other side Century ply MDF has also witnessed sharp growth in market space in all categories.

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