India boosts natural rubber imports on strong rupee, weak prices

By Rajendra Jadhav

MUMBAI, May 20 (Reuters) – Indian imports of natural rubberare likely to soar over 70 percent in the three months that endin June from the same period last year, as a strong localcurrency and lower global prices prompt tyre makers to snap upcargoes.

Increased imports by India would buoy international prices, which have fallen around a quarter this year onconcerns over economic growth in China and on plans by worldNo.1 rubber producer Thailand to sell 200,000 tonnes from itsstate stockpiles.

“Imports could rise above 100,000 tonnes in the Junequarter. Tyre makers are aggressively placing orders,” saidGeorge Valy, president of the Indian Rubber Dealers’ Federation.

India, which usually buys from Thailand, Malaysia Indonesiaand Vietnam, imported 58,346 tonnes in the same quarter lastyear.

The rupee this week rose to its strongest in 11 monthsagainst the U.S. dollar on expectations of robust foreigninterest in domestic shares and debt after the Bharatiya JanataParty swept to victory in the country’s elections.

“Imported rubber is cheaper than local supplies even afterpaying 20 rupees (per kg) duty,” said an official at ApolloTyres, who declined to be named as he was notauthorised to speak with media.

Tyre makers have been paying 127 rupees per kg for importedMalaysian grade rubber, including import duty and freight,against local price of 150 rupees per kg.

Indian prices have recently been supported by a drop inlocal output, with April production falling 3.8 percent from ayear ago to 51,000 tonnes.

“Local production is not sufficient to fulfil demand. InApril production fell and even in May production will be lower,”Valy told Reuters.

That comes after natural rubber prices in India hit afive-year low of 138 rupees per kg earlier this month, drivingsome farmers to curb tapping.

“Many farmers have not been tapping. They can’t recover thecost of production,” said N. Radhakrishnan, a dealer and formerpresident of the Cochin Rubber Merchants Association.

Farmers have also been reluctant to spend money putting rainguards on rubber trees ahead of the monsoon months of June andSeptember. These are typically pieces of plastic that surround atree’s trunk above the tapping panel.

“The supply shortage is likely to increase after June. Iffarmers are not putting up rain guards, then they won’t be ableto tap during the rainy season even if prices rise,” saidRadhakrishnan.

India is the world’s fifth largest natural rubber producer,but its imports have more than doubled in the last few years dueto the rapid expansion of its auto industry. They stood at325,190 tonnes in the year that ended March 31.

Indian tyre producers include CEAT Ltd, JK Tyre andIndustries Ltd, MRF Ltd and Balkrishna Industries Ltd.

“Indian imports can support global prices, but local priceswill remain under pressure as tyre makers are slashingdependency on local supplies,” Valy said. (Reporting by Rajendra Jadhav; Editing by Joseph Radford)