India: Rubber output shrinks by 36%, demand slows

KOCHI: Rubber production fell 36% in December 2014, showing the steepest drop of the year. Consumption has increased marginally while growth in imports has slowed down. The production slump has happened during the peak harvest phase.

The Automotive Tyre Manufacturers’ Association (ATMA) quoting Rubber Boardfigures said production in December 2014 plunged 36% to 63,000 tonne. Between August and November, production fall ranged from 25% to 33%.

Consumption improved marginally to 83,500 tonne during December. The growth in imports has dropped to 8% from 19% in November.

Meanwhile, domestic rubber prices which vaulted 13% to Rs 130 per kg after an understanding was reached between the Kerala government and tyre companies in December to mop up rubber from the local market to help growers have slid by 2 %.

This is attributed to the weak sentiment in the global market. “The plummeting price of crude oil and the restrictions on rubber import by China have led to a fall in international prices. China has taken a decision to reduce the use of natural rubber in rubber compounds from over 95% to 88% from July 1,” said C P Krishnan, wholetime director of Geofin Comtrade.

Synthetic rubber prices are linked to crude oil and falls in proportion.International rubber prices are likely to remain sluggish, which may reflect on the domestic prices. Tyre companies have now started to purchase rubber from the local market.

“Growers were reluctant to sell initially. But now we are getting materials. We buy around 200 to 300 tonne daily. We are ready to buy more if they bring it,” said Swaranjith Singh, director (materials), J K Tyres. But industry sources say that the benefit of the scheme, under which tyre companies buy at the rate of Bangkok price plus customs duty, goes mostly to intermediaries. “Growers still get around Rs 110 per kg while tyre companies are buying at a rate around Rs 130 per kg,” said N Radhakrishnan, a leading rubber merchant.

– India Times