Laminate makers to gain the most from trade war

Intensifying trade war between the US and China, the Donald Trump administration has proposed 10 per cent import duty on Chinese products, including vinyl flooring, laminates and furniture. Imposing such duty would benefit Indian exporters such as Greenlam Industries and Responsive Industries.

In the latest spell of the trade war, the Trump administration announced that the US was weighing imposing tariffs on a further $200 billion on import of Chinese products. The proposal is set to cover vinyl flooring, laminates and furniture. The US imports in excess of $4 billion worth of these products from China, of which vinyl flooring contributes $1.78 billion.

"We are going to be the biggest beneficiary of this move. We are not only the largest player in vinyl flooring in the country. We also export our products to the US and other developed countries in Europe," said Rishabh Agarwal, Managing Director, Responsive Industries Ltd (RIL).

RIL exported vinyl flooring products worth of $54 million in FY18 and is expecting to ramp up exports to the US on an incremental basis by $10 to 15 million in contract sheet vinyl flooring alone.

"We have been strengthening our distribution network in the US to increase our high value added vinyl flooring products exports. The US and Europe contributes 50 per cent of global vinyl flooring sales. We are the only manufacturer and supplier of non-PVC flooring in India with exports to the US," Agarwal added.

With an annual turnover of ~11 billion, plywood maker Greenlam Industries aims to increase its sales to the US.

"Greenlam exports around $5-6 million worth of laminates to the US. At this point in time, it is difficult to assess the increase in exports, if any, given that the US is a large player in the branded laminates segment. But, there is a possibility of shift in consumption from bulk to the branded products, which may benefit Indian players like us," said Ashok Sharma, Chief Financial Officer, Greenlam.

Reacting to the news, however, share price of Responsive Industries jumped by 5.74 per cent to close at Rs 99.45 apiece on Friday. Following the move, share price of Greenlam and Greenply Industries also moved up by 1.54 per cent and 2.63 per cent, respectively, on Friday.