HomeNewsGeopolitical tensions may affect new MDF projects

Geopolitical tensions may affect new MDF projects

The ongoing war between Russia and Ukraine may also affect the implementation new projects for manufacturing MDF, say some manufacturers in the wood panel industry. This may be beneficial for the existing manufacturers in the short term as there will be no further capacity addition in the near future. This may also impact the product pricing in the short to medium term.

At present, Centuryply and Rushil Décor are adding capacity to manufacturer MDF. While Rushil is on the verge of completing the project, Century has started executing the project a couple of months back. Due to geopolitical tension sourcing of parts has also become difficult and time consuming.

Due to uncertainty prevailing, some manufacturers are temporarily holding back their capex plans. For example, Greenpanel has decided to take a final call on the capacity expansion only towards the end of May or early June. Delivery of plant can start only after one year from the finalisation of the supplier. Thereafter, it may take 12-18 months for the execution and completion of the project. Thus, prevailing war may cause delay of 6-12 months in the completion of new projects. Further. High cost of steel which has gone up by 20% in last three years is another issue in new capacity addition.

India’s MDF capacity has risen from 1.9mn cbm in FY21 (demand: 1.5mn cbm) to 2.3mn cbm at present (demand: 1.7-1.8mn cbm). Capacity is expected to rise to 3mn cbm by FY25, with demand of 2.5mn cbm.

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