Local industries in India that require rubber usually import from other countries as domestic rubber prices are usually higher. But as rubber production increased, the price of domestic rubber has decreased.
The overseas price of rubber was Rs10 per kg costlier than Indian prices during the last week of November. With duties, the import cost of rubber was at Rs170 per kg whereas the Indian price was Rs130 per kg by the end of November.
However, a shortfall in the Northeast Monsoon now poses a concern as industry players expect it to reduce production, which will be visible from January.
“Due to demonetisation there will be 30-40% fall in tyre sales in the country. This may slow down the sector. But now Indian rubber prices are cheaper and hence it will be good for growers. The long term story of rubber is intact,” Tomy Abraham, President, Indian Rubber Dealers Federation said.
Natural rubber production increased 15% to 60,000 tonnes in October and the consumption grew 4% to 86,000 tonnes, according to Rubber Board data.
“Production and consumption stood at 52,000 tonnes and 82,650 tonnes, respectively, in the year-ago month. Imports of natural rubber went up 3% to 44,520 tonnes in October. During April-October period of 2016-17, production increased nearly 11% in the corresponding period of the previous year,” says the board.
Rajiv Budhraja, Director General of Automotive Tyre Manufacturers’ Association (ATMA), said that base effect is coming into play and the real increase in production is yet to be felt. He also said that there are disruptions in arrivals of new stock caused by demonetisation, so the availability of natural rubber continues to be a concern even though production has already gone up.
He also added that the increase in natural rubber imports during April-October period is affecting the growers.