Indian tire manufacturers seek new natural rubber supply due to domestic production slowdowns

Singapore – The Press Trust of India reports, “Indian tire manufacturers are actively seeking the supply of natural rubber from Southeast Asian producers due to the slowdown in domestic production and increase in demand, industry officials said. India’s rubber industry is also expected to do hedging and risk management on the Singapore Commodity Exchange (SICOM), prices set which are used as a benchmark for rubber export from Southeast Asia.

“More Indian tire manufacturers and rubber consumers have been reaching out to Southeast Asian rubber producers to secure supply,” said Tan Tee Yong, director for rubber commodities at the Singapore Exchange (SGX), the parent group of SICOM. He noted that Indian rubber-linked companies have set up offices in the midst of Singapore’s global rubber trading hub, led by major producers.

“The supply gap in natural rubber is expected to widen due to a slowdown in production in Kerala, and there are limited opportunities for further rubber plantation area expansion in that state,” said Lekshmi Nair, head of economics and statistics at the International Rubber Study Group (IRSG). Noting the growth in demand driven by industrial developments, she said, “The expected mature rubber area expansion in the non-traditional rubber growing states in the North and Northeast is not sufficient to meet the future domestic demand requirements”. “The rubber industry in India will continue to rely increasingly on imports, especially on Southeast Asian producers, for the domestic demand requirement,” said Nair. India’s dependence on rubber supplies from the international market will grow further, added Nair, pointing out that India currently imports more than 50 percent of its rubber requirement. For synthetic rubber, the deficit is likely to remain despite an increase in domestic production, she said, ahead of the World Rubber Summit scheduled for March 22-23 in Singapore. With increasing import demand for natural rubber, both Indian and International tire companies are more likely to position in futures trade as the supply/demand gap is expected to widen in the future.”