Tyre-makers in India may raise their natural rubber imports to take advantage of the global fall in prices and to counter the supply crunch at home.
Natural rubber production in India fell to its lowest in a decade last year at 562,000tonnes, while imports soared to a record 458,000 tonnes. The country’s Rubber Board estimated a 2.3% year-on-year rise in output in the first quarter, but traders said that arrivals in the market are poor.
“As per the board’s estimate, the stock is over 2 lakh (200,000)tonnes. What defies logic is that people are not offloading despite prices being higher in the off-peak period. This shows that the stock position shown by the board may not be correct,” said Rajiv Budhraja, director general at Automotive Tyre Manufacturers’ Association.
The peak production phase of rubber starts next month. The current domestic price of Rs 144 a kg is about Rs 15 higher than sheet rubber price in the global market. Global prices jumped by Rs 12 to Rs 131 per kg in the last week of July before retracting to previous levels.
A trader said that the industry will depend more on imports as the 654,000 tonne production output projected by the Rubber Board may not be achieved. Production may likely be below 600,000 tonnes. To add to that, crumb rubber available at Rs85 per kg overseas is cheaper even with the 25% duty and is better in quality.
Imports could touch 400,000tonnes as production is likely to be 600,000tonnes while the projected consumption is 1 million tonnes. Three of the world’s biggest natural rubber producers-—Thailand, Indonesia and Malaysia— are set to meet next week to review their export restrictions.