Cost inflation is going up unabatedly and manufacturers are finding it difficult to contain it. Wood panel industry too is struggling to contain the impact of increase in the price of phenol which has gone up steeply in recent months. Phenol is used for making glues and an increase in its price will have impact on the margins of wood panel manufacturers.
According to chemical dealers, phenol price has gone up by more than 60% in last one year. Further there is demand supply mismatch which is aggravating the situation. Dealers complain that as a result of steep increase in demand delivery schedules are running into weeks. Also, many times, orders had to be cancelled putting the user industries into uncomfortable situation.
In India there are there are three major players – Deepak Nitrite (with18,000 tonnes/month capacity), Haldia Petrochemicals (4,000tonnes/month) and HOC (3,000 tonnes/month). In addition, India imports about 5-7,000 tonnes from abroad. Against this the demand is currently ruling at 35-40000 tonnes. Due to demand supply mismatch not only price is going up but also delivery schedules are getting disrupted. This mismatch has affected the unorganised sector more than the players in the organised sector due to lower inventory holding capacity of the former.
Phenol is a chemical with multiple applications and major end requirement for phenol is in Plywood followed by personal care (cosmetics /fragrances) and pharmaceuticals. With lockdown rules being relaxed slowly, activities in construction and real estate are increasing. Also, demand from pharmaceutical industry is inching up in recent months. So, the dealers don’t see the possibility of price easing up in the near future.