ET bureau

Indian tire makers say there is still a “severe” shortage of natural rubber in the domestic market.

As the domestic season continues, the industry has no choice but to import natural rubber, leading to higher costs, they said.

According to data released by the Rubber Board, natural rubber production for the six months to September (NR) rose 5 percent year-on-year to 321,000 tons, while consumption rose 2 percent to 527,880 tons. The deficit was 39.2%, slightly lower than the same period last year (41.1%).

Satish Sharma, Chairman, Automotive Tire Manufacturers Association (ATMA) “The grim situation in the natural resources industry continues. Domestic production remains well below domestic demand.”

The Rubber Board had previously forecast natural rubber production at 800,000 tons in 2017-2018, up 16% from last year.

However, ATMA said it is highly unlikely that production should increase by 24% in the second half of the year compared to the same period last year based on half-yearly data.

Sharma said, “Although domestic natural rubber prices are higher than the international market, supply is still tight.”

Production has resumed in full swing in Kerala where gum cutting operations were suspended last week due to rains.

Kochi Rubber Merchants Association GPP Goyal “However, the market is tight as growers are holding stocks in anticipation of higher prices.”

The domestic market price of the best RSS-4 rubber is Rs 131 per kilogram, which is Rs 27 higher than the international market price. “Prices could reach Rs 1,400 kilograms per kilogram,” Goyal said.

The tire industry has been importing block rubber at Rs 95 per kg to meet the deficit between production and consumption. In the first six months of 2017-18, imports declined 10% year-on-year to 224,793 tons, but are likely to increase in the coming months.

According to ATMA, natural rubber imports are subject to a 25% duty, which is the highest in the world, adding to the industry’s costs. The industry has been seeking ‘zero’ tariff quota (TRQ) licenses to import natural rubber to bridge the gap between domestic production and consumption. Imports are made from Chennai to JNPT port.