Recent price cut initiated by Action Group on selected MDF products has belied the hopes of normalcy returning to MDF market. Recently, Action Group effected 2-3% price cuts on selected thickness MDF like 3.3mm, 4.5mm, 5.5mm, 11mm and 16.5mm, thus setting the field open for another round of price cutting by the rivals. It is expected that other MDF manufacturers like Greenply and Century Ply too may follow the suit and effect price cuts to maintain their sales volume.
It may be remembered here that last year in April, it was Action Group which had initiated price war by cutting prices by 6% in thick MDF and 9% in thin MDF. This eventually forced other players like Greenply and Century Ply to cut prices of their products. Price cuts by the manufacturers are resorted to as there was huge capacity addition of 1350 CBM per day in North India during the last 12-15months.
Greenply recently commissioned its Andhra plant which helps the company to cater to South Indian market. The company has reportedly cut its MDF price by 12-15% for Southern consumers by passing on the logistics cost saved by the company. However, price gap between Greenply and imported MDF is still in the range of 10-12%.
Threat posed by fresh capacity addition in the industry refuses to die down. According to our sources, some small time players are planning to set up MDF plant in North India which if happens will further aggravate the situation. It is believed that many MDF manufacturing units have shut their shutters down in China and this dismantled units are available at attractive prices. Some of the adventurous entrepreneurs are planning to import these second hand units and set up manufacturing units in North India, thus giving fresh bout of headache for the existing players.