India’s NR demand drops; tyre companies contract for imports

Poor global rubber prices,due to the US-China trade war, and a declining demand from Indian tyre manufacturers have driven down the value of natural rubber (NR) in India, with a further drop expected in the coming weeks.

According to Indian rates, the price of RSS-4 NR variety, used in tyre production, has dropped to Rs 140 (US$1.95) per kg – its equivalent in the global market is significantly cheaper over the same period.Rubber production in the country was also marginally down to 123,000 tonnes in the quarter ending June from a year ago while consumption has declined by 4% to 293,000 tonnes.

Further, an unexpected barrage of heavy August rainfall in northern parts of Kerala caused leaves of rubber trees to fall off and has affected yield. Santhosh Kumar, Senior VP of Harrisons Malayalam, a local rubber producer, said: “We have noticed fungal problems in the trees in the Kottayam belt, so, there could be 20-25% drop in production during the month.”

With the international prices way below the Indian rates, tyre companies have already contracted future import deliveries, among them block rubber. Block rubber costs about Rs 100 (US$1.39) per kg.

Despite the setbacks, Tomy Abraham, President of the Indian Rubber Dealers Federation, thinks that the tyre industry’s rubber demand may soon improve following the state incentive scheme that promises a subsidy to rubber farmers in Kerala.