Demand trends in the wood panel market have been steady so far in Q2FY23 (July-September). According to ICICI Securities Ltd., recent interaction with dealers and companies in the industry indicates that continuous momentum in the residential market and higher spending on home improvement, after the pandemic, are keeping demand robust.
"Plywood market has continued seeing higher demand for mass market and brands like Sainik due to inflationary environment which may continue in the near term," said the ICICI report. It added that demand in the MDF segment, too, remained steady due to increased acceptance of readymade furniture.
"We believe demand should improve for wood panel market post the festival period as underlying drivers continue to remain favorable," it said
Plywood margins may see some pressure in the near term (but still be better than the low base of Q1FY23) due to higher demand for mass products (which have lower margins) whereas MDF margins will decline ~120 basis points year-on-year to 30.5% in FY23 on account of higher raw material cost, added the report.