Tyre makers in India have termed as “grim” the continuing shortfall of natural rubber in the domestic market.
They said the industry is being forced to import natural rubber, which is driving up costs amid the ongoing peak season in the country.
According to data released by the Rubber Board, natural rubber (NR) production grew 5% year-on-year to 321,000 tonnes in the six months to September, while consumption rose 2% to 527,880 tonnes. The deficit at 39.2% is marginally lower than 41.1% in the same period last year
“The grim situation on the NR front continues. Domestic production continues to be far below the domestic demand,” said Satish Sharma, chairman of Automotive Tyre Manufacturers Association (ATMA).
The Rubber Board had earlier projected NR production in 2017-18 at 8 lakh tonnes, a growth of 16% over the previous year.
But ATMA said looking at the half-yearly data, production needs to grow at a rate of 24% year-on-year in the second half, which seems highly unlikely.
“There is availability crunch despite the fact that domestic NR has been fetching higher prices than prevailing internationally,” said Sharma.
Tapping has resumed in full swing in Kerala after the rain-forced interruption of last week.
“But availability is tight in the market as growers are holding the stock expecting better price,’’ said G P Goyal, president of Cochin Rubber Merchants Association.
The best quality RSS-4 rubber is selling at Rs 131 a kg in the domestic market, which is Rs 27 more than its price in the international market. “It may touch Rs 140 per kg,’’ Goyal said.
The tyre industry has been importing block rubber available at Rs 95 per kg to bridge the deficit between production and consumption. The imports, which had shown a 10% year-on-year decline in the first six months of 2017-18 at 224,793 tonnes, may increase in the coming months.
According to ATMA, import of NR attracts a 25% duty, which is highest in the world and adds to the cost push of the industry. The industry has sought permission to import NR on a tariff rate quota (TRQ) basis at ‘nil’ rate of duty to the extent of gap between domestic production and consumption. It has also asked for removal of port restrictions on natural rubber, which can be imported only at Chennai and JNPT ports.
