KOCHI: The sharp fall in crude oil prices has not made synthetic rubber cheaper, much to the frustration of the rubber products industry, which is struggling to come out of a persistent downturn in demand. Synthetic rubber (SR), a derivative of crude oil, is used extensively in the tyre and other rubber goods industry.
The suppliers of SR, which India mostly imports, are yet to reduce the prices, given the increasing demand for the products world over. The radialisation of tyres has increased the usage of SR in the tyre industry. The percentage of SR used in car radials is more than in the ordinary tyres.
“While the raw materials for synthetic rubber are based on crude derivatives, they have their own demand and supply position, which influences their pricing. This, in addition to the continued weakening of rupee against dollar, has resulted in SR producers maintaining their costs. Hence, not much has changed in terms of our cost of production,” said Gaurav Kumar, CFO of Apollo Tyres.
Both the production and consumption of synthetic rubber has been going up in the country. At the same time, natural rubber production has been showing a consistent drop in the last one year. As per Rubber Board data, SR production was up by 35% and the consumption by 5% in the five months to August 2015 from a year ago. Both the NR production and consumption fell during the period.
The non-tyre industry comprising footwear, bicycle tyre tubes, conveyor belts, hoses and tread rubber, is a significant consumer of SR. The main SR used is styrene butadiene. Others like EPDM, chloroprene and silicone are imported.
