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Thursday, October 21, 2021

India: Short supply forces tyre companies to import rupee-hit rubber

KOCHI: Despite higher global prices andrupee depreciation, tyre industry is still relying on natural rubber imports as domestic production is yet to reach full swing after the heavy monsoon. Fall in rupee has also raised the production cost of tyremakers.

The global sheet rubber prices have gone up by Rs 20 to Rs 170 per kg while the prices of block rubber SMR 20, which are now mostly imported by tyremakers, are hovering around Rs 158 per kg, up by Rs 13 during the month.

“The availability is still tight in the domestic market. So, we may have to depend on natural rubber imports for some time,” said Rajiv Budhraja, director general of Automotive Tyre Manufacturers’ Association. Till the end of July, the natural rubber imports had gone up 9% to 87,656 tonne as the domestic production have been down 39% in June and July due to heavy monsoon.

Though tapping has started, it is slow as some regions are still having rains. “We can expect the production to reach full swing after Onam, in the third week of September,” said N Radhakrishnan, former president of Cochin Rubber Merchants Association. After the heavy showers, it could take few weeks for productivity improvement. The domestic rubber prices have dropped by Rs 10 to Rs 185 per kg in the month. According to Radhakrishnan, it could remain more or less at the same level for the coming weeks.

The rupee fall has made the imports of synthetic rubber like SBR and BR costly, according to Niraj Thakkar, president of all India Rubber Industries Association. Synthetic rubber is also used in tyres at a lesser quantity than the natural rubber. “The volatitlity in rupee has adversely impacted the industry,” he said. The industry is hoping for some duty concessions from the government to rev up the market before the festival season. “At present, the things don’t look optimistic in the third quarter unless the government provides some duty concessions,” Budhraja said.

Source: India Times

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