eConstructionMart Blog Tiles Price: Today On World Morbi Ceramic Makers Hike Prices

India has been well guarding its leading position in the global ceramics market. The surge in initiatives by the government of India to promote industries in general, has resulted in a decent growth for the industry in 2018. Although the future looks promising, the Morbi ceramic cluster is facing stiff hurdles in its path to grow. Morbi, which serves as the largest ceramic cluster in the country, accommodating over 1000 players, has been witnessing tremendous heat from the recent policy changes in addition to a shift in the perception of global economies towards the industry.Recently, Mr Nilesh Jetparia, President of the Wall Tiles Division, Morbi Ceramic Association announced that after carefully analysing the impediments the industry has been recently facing, the association has decided to increase the prices of tiles from April 01, 2019. Buyers, customers and other industry participants can expect a surge of 10% to 20% in the tiles price list.Why are the prices being increased?The tiles price increase comes as a surprise to people, who saw the industry facing a steep increase in manufacturing capacity. The common perception and economic intuition says that if the number of players in an industry along with the industry wide production capacity dramatically increase, the prices should go down. That was the case historically, even with the Morbi cluster of ceramics. Hence, the price rise comes as an anomaly to the ongoing trend.The prices are increasing due to a series of reasons, that range from the very local changes in policy as well as global perceptions about the industry:1. NGT Shocks:NGT recently announced that over 45% of the players in the Morbi ceramic cluster will have to immediately shut down their operations, because of their coal based manufacturing processes. The targeted manufacturers had been using coal gasifiers in their respective manufacturing cycles. The change comes as a surprise to several players because many of them were using coal gasifiers which were already in compliance with the pollution control norms in the region. Effective immediately, NGT has ordered the said plants to shift to a PNG based gasifier system for their respective manufacturing units and until it is implement, shut the operations.The key issue is not the adaptation costs but the increased costs the targeted manufacturers will face because of shift to a PNG gasifier system. In accordance with the global markets, PNG prices would increase the gasifier system running costs by close to 50%, in respect with the earlier costs. As per the statement made by Jetparia, Gujarat Pollution Control Board has already acted on the orders of the NGT and made close to half of the manufacturers from the Morbi ceramic cluster, to shut their operations.2. Rajasthan Government Imposition:Since 2018, the Rajasthan government has been trying to limit the shift of soda feldspar and potash feldspar. The government has publically stated, earlier, that it intends to use the state's production of both these raw materials for generating employment for the locals in the state.Hence, the sudden shift in the policy does not come as a surprise. As per government rules, both these materials, which are critical in production of vitrified tiles, will now be transported out of the state only in powdered form. Earlier, in order to facilitate the manufacturing process, they were sent in chips form.This is also said to impact several players in the industry, who have a product portfolio heavily dependent on vitrified tiles.3. Gulf Perception:The local players in the Gulf have requested to look into the pricing practices of the Indian ceramic industry, sighting signs of dumping. The Gulf Cooperation Council is investigating the matter. If the GCC imposes an anti-dumping duty on the Indian ceramic exports, it will have a deeply negative effect on the already sieged Morbi ceramic cluster.In Conclusion:With over 45% of the industry being forced to shift to PNG based gasifiers along with protectionist measures being taken by both GCC and the Rajasthan Government, the price rise is being perceived as a proactive solution for the industry to protect its profitability and scale of manufacturing. The price increase is expected across the ceramic products portfolio, including branded products such as Kajaria Tiles and Johnson Tiles.