Government’s urea curbs may impact plywood industry

Government’s stringent effort to restrict the use of agricultural grade urea (subsidised urea for farmers) for other purposes may affect some of the manufacturers of commercial grade plywood. It may be noted that the urea meant for agriculture is being illegally used in manufacturing of resins for commercial grade plywood, a low end plywood with higher share of unorganised players.To get more news about commercial plywood, you can visit boosterplywood.com official website.

However, the government of late, is taking several steps to curb the use of subsidised urea for non-agricultural purposes. The fertilisers department has initiated a multi-pronged strategy to stop the diversion and black marketing of agriculture-grade urea after it received various complaints. The diversions are happening despite the urea being coated with neem. States have also been directed to cancel the manufacturing licences of 25 defrauding units and de-authorise them from purchasing subsidised fertiliser from the government portal.

The government’s actions have led to significant rise in the cost of manufacturing of plywood as the technical grade urea costs 6 times of agricultural grade urea. This has led to lower supply of commercial grade plywood. This in turn may help BWP (boiling water proof) plywood, whose market took a hit due to significant price difference with commercial grade plywood and may witness strong improvement in demand in the coming days.

Meanwhile, the market participants complain about the moderation in demand in general in May-June months which is due to slowdown in pace of construction activity given the inflation across building products.