Though the market was anticipating a price cut on MDF by Greenply, what surprised them was the quantum of price cut resorted to by the company. Greenply Industries considered to be the market leader in plywood including MDF, recently cut prices of MDF by 8-10%. According to some dealers, they were expecting a price cut of around 5% but the plywood major has surprised them. After the price cut, the pricing gap between Greenply and other top players has fallen drastically. Remember, Grenply products always command premium in the market. According to analysts, others may go for further price cuts to gain more market share.
Action Tesa, a key competitor in the MDF segment, doubled its capacity in the 4thquarter of last financial year which was preceded by Century Ply foraying into MDF last year. In fact, in last two quarters, MDF capacity has gone up by 78%. In order to gain market share, Action Tesa resorted to price cut in April, which was followed by some other players too in the market. However, Greenply resisted any move to cut the price and instead offered its dealers incentive schemes. However, the company had to give in to market pressure and reduced the price recently to regain its lost market share. The company has recently, commissioned a new MDF plant in Andhra Pradesh which will cater to Southern and export markets.
What has aggravated the price erosion is the increased imports in recent weeks which was against the market expectations. Indian manufacturers were expecting reduced imports due to rupee depreciation and falling price in the domestic market. But that has not deterred the foreign suppliers and the now the imported MDF has started entering North Indian markets too. Till now, imported MDF was available only in Southern market as higher logistic costs made it commercially unviable to sell in North Indian market. But situation has changed altogether recently and now the domestic manufacturers don’t rule out further price cuts in the coming months.