Domestic supply-demand gap is widening in natural rubber


The gap between domestic production and consumption of natural rubber is on the increase, leading to heavy shortage for the commodity in local market. Total production during April–January period of the current financial year was 723,000 tonnes, while consumption was 811,110 tones, leaving a shortage of 88,110 tonnes. This shortage in the domestic market, which is swelling up every month, is being compensated through import. This is the main reason behind the sharp rise in imports in the current financial year. It is the import that ‘saved’ the rubber based industries, especially the tyre industry from a major crisis in this financial year.

According to Rubber Board data, the reason behind the shortage is heavy fall in production. For example in the current financial year, except in April, 2013, in all other months production had dropped by 10% on an average. As per the latest data of the board, in January, 2014 production fell 7.9% at 93,000 tonnes as against 101,000 tones in the same month of 2013. Normally production crosses 100,000 tonnes in November, December and January as this is the peak season for tapping. But in last month production was below 100,000 tonnes. This continuous fall in production had affected the supply side, hence rubber based companies, especially the tyre producers opted the import route. During April- January period of the current financial year production dropped 9.4 % at 723,000 tonnes as against 798,200 tonnes in the same period of last fiscal year.

Despite the negative growth in the automobile sales, rubber consumption was rather steady during April – January period. Rubber Board said that consumption had a marginal decrease of 0.9% at 811,110 tones. The supply – demand gap was largely managed through heavy import during the period. So there had not been a significant rise in the domestic prices of natural rubber.

Import edging towards 300,000 tonnes

For the first time in the history of rubber trade in India import is likely to cross 300,000 tonnes in this fiscal. Indicating this, total import in April – January period increased to 279,627 tonnes, recording 43 % rise over the same period in 2012-13. Import was a cheaper option for the industries as international prices were lower by Rs 15-20/Kg than the local prices.

Meanwhile, India is virtually out of the global market of rubber as export was just 133 tonnes in January. The cumulative figure for April- January period was 5357 tones as against 15,632 tonnes in the same period of last FY. Rubber Board informed that India has a stock of 272,000 tones at the end of January, 2014.

Source: Business Standard
Published: 25 Feb 2014