China International Ceramic & Bathroom Fair, Foshan
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Boom in Ceramic Units Puts Pricing under Pressure
Time:2018.08.28 Views:551
The
huge increase in Morbi in the number of new units manufacturing
vitrified tiles has left India’s largest ceramic
industry cluster saddled with excess production of such tiles.
Over production of vitrified tiles has put tile-makers in the area under
pressure to keep prices low.
In
the past two years, around 133 new vitrified tile manufacturing facilities have
become operational in Morbi. The production has capacity risen from 4 lakh boxes
per day to 18 lakh boxes a day, thus creating greater supply than demand. (According
Market Survey.)
“Two
years back, there were 77 units making vitrified tiles. Today, their number has
jumped to 210,” The excess capacity and production has put pressure on prices which
have already come down by 10%.
“Although
the demand for vitrified tiles have improved, overproduction is taking a toll
on prices,” said a ceramic tile maker from Morbi. “The production capacity has
surged 4.5-fold in two years while the annual growth in demand is 20%. This
means, the excess capacity will take at least five years to be fully absorbed.”
According
to Market Research with increased supply and prices going down vitrified tile
producers are either cutting down their production or keeping their units shut
for some time to stay afloat amid growing competition.
Three
years ago, wall tile segment had faced a similar problem when the number of
units spiked from 200 to 350. Now, a similar trend is being witnessed in
vitrified tiles.
Tile-makers
attribute lack of diversification to sudden jump in production capacity. “Most
of the new units have been established by the entrepreneurs from Morbi. They do
not diversify into other sectors or products and tend to pump in their profits
only in the ceramic industry. This has led to the problem of excess capacity.”
However,
now no new vitrified tile-making units are in pipeline. “New units are unlikely
to come up in the next few years. First, the current capacity has to be fully
utilized.”.
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