Tyre industry set to import more rubber to meet demand

Jul 11, 2016

Though the prices are above Rs 140 per kg, not many small growers are tapping by installing rain guards. The big estates may be forced to do that as they have to pay wages to employees.

Small rubber growers, who form the bulk of producers, have not gone for tapping despite recent increase in prices, paving the way for the tyre industry to step up imports to meet its demand.

"Though the prices are above Rs 140 per kg, not many small growers are tapping by installing rain guards. The big estates may be forced to do that as they have to pay wages to employees," said PM Thomas, former managing director of Pala Rubber Marketing Cooperative Society.

"A new price incentive scheme by the new state government may encourage more tapping," he said. Rubber output for April- May at 85,000 tonnes is the same as that of a year ago, although May saw a 2.2% increase, as per Rubber Board data. The tyre industry indicated that it may have to increase reliance on imports. "In the last couple of weeks, it has become extremely difficult to meet our daily requirement as supply has become tight in the domestic market," said Ashish Pandey, vice-president-materials at JK Tyres.

Import of natural rubber went down 6% in April-May from a year ago to 69,995 tonnes. But industry executives said they expect imports to go up in the coming months, especially since the block rubber price in the international market is more than Rs 50 cheaper than the RSS-4 variety in India. The previous Congress-led government had successfully implemented a Rs 300-crore price support scheme for small growers, helping them get a price of Rs 150 per kg when the prices had gone down below Rs 100 per kg.

Meanwhile, the Association of Natural Rubber Producing Countries (ANRPC), a major organisation of producers, said in its monthly review that Brexit does not pose a threat in the short term.

Although the production from ANRPC countries including India fell 0.7% in the six months ended June, it is expected to look up in the second half, with the supply expected at 11.157 million tonnes, 1% more than that in 2015, the association said. Consumption too is expected to improve, it said.

Source: ETAuto.com