India’s natural rubber imports could rise nearly 18 percent to a record 500,000 tonnes in the next financial year, buoyed by rising local consumption and lower prices overseas, industry officials said on Wednesday.
Higher imports by the world’s second-biggest consumer of rubber could support global prices, which have risen by more than a quarter since hitting their lowest level in more than five years last September.
“The wide gap between local and overseas prices will ensure higher imports,” George Valy, president of the Indian Rubber Dealers’ Federation, told Reuters on sidelines of industry conference India Rubber Meet.
India, which buys most of its natural rubber from Thailand, Malaysia, Indonesia and Vietnam, is expected to ship in about 425,000 tonnes in the current financial year to March 31, he said.
Rubber in India is available at $2.10 per kg, compared with $1.41 in Malaysia, prompting tyre makers such as CEAT Ltd , Apollo Tyres, JK Tyre and Industries , MRF Ltd and Balkrishna Industries to increase imports.
The consumption of natural rubber could rise to 1.1 million tonnes in 2015/16, up 10 percent from the current year on expected higher demand from the tyre industry, estimates Rajiv Budhraja, director-general of the Automotive Tyre Manufacturers’ Association.
“We are expecting the two-wheelers tyre segment to grow by 10-12 percent, passenger cars by 5-6 percent and commercial vehicles by 2-4 percent,” Budhraja said.
Tyre makers, the biggest consumers of natural rubber, are expected to prosper from an increase in Indian vehicle sales amid optimism about the economy under the new government of NarendraModi.
A marginal rise in natural rubber prices in recent weeks could prompt farmers in the world’s fifth-biggest producer to resume tapping after some had suspended operations because of lower prices.
“On the back of better prices and slightly better weather, we can see a 15 percent rise in production,” Budhraja said.
India could produce more than 800,000 tonnes of rubber next year, against about 700,000 tonnes this year, he added.