Second quarter performance of Greenpanel Industries clearly indicates changing fortunes of the Medium Density Fibreboard industry. The company has posted 33% growth in the volume despite the continuation of partial lockdown in some parts of the country. According to industry sources, MDF manufacturers are one of the indirect beneficiaries of outbreak of Corona virus in the country.
Outbreak of Corona Virus and subsequent lockdown and social distancing norms have given rise to work from home (WFH) culture in India as elsewhere in the world. WFH and social distancing have resulted in people opting for ready made furniture in the market and MDF is the most preferred material used in manufacturing ready made furniture.
Management of Greenpanel expects demand to remain strong in the second half too due to increased acceptance of readymade furniture on account of Covid-19. Interestingly, most of the demand for the material is coming from smaller towns as major cities are not yet completely out of COVID-19 effect.
What makes the short term prospects of MDF brighter is the fact that there are no new capacities coming up in the near future. Commissioning of an upcoming MDF plant by competitor Rushil Décor has been delayed to April 2021. Restrictions on import of MDF/furniture have also acted in favour of the industry. Further, Indian government is investigating anti-dumping duty/CVD on MDF imports and the industry expects some positive judgment over next 3-4 months. Meanwhile, price difference between domestic and imported thick MDF has narrowed from 10% to 7%. However, the difference continues to be same for thin MDF, that is, about 25%. Import restrictions, depreciating rupee and robust demand are likely to help the domestic manufacturers to achieve higher volume without reducing prices.