Rubber demand-supply gap widening

Last Updated: Mon, Oct 15, 2012 19:40 hrs

The consumption of natural rubber rose 5.6 per cent in the first half of the current financial year, while production rose only 1.1 per cent. Experts say this would exert pressure on supplies and prices of the commodity in the local market. Currently, user industries, especially the tyre industry, address the supply crunch through imports, which have risen to 1,12,640 tonnes in the April-September period, against 91,186 tonnes in the corresponding period last year.

Total consumption in the April-September period stood at 5,01,940 tonnes, compared with 4,75,485 tonnes in the year-ago period, while production stood at 3,95,700 tonnes, compared with 3,91,400 tonnes in the corresponding period last year. The demand-supply gap is widening on a monthly basis.

The increase in production of automotive tyres is the primary factor behind the rise in consumption. Good demand from original equipment manufacturers and the replacement segment aided the rise in tyre production. Despite the current global slowdown, exports, too, have risen. The consumption of natural rubber by the tyre sector rose 5.7 per cent.

  • 5.6% Rise in natural rubber consumption in the first half of the current financial year
  • 1.1% Rise in rubber production in the same period
  • 9,30,000 tonnes is Rubber Board's estimated output for current financial year
  • 10,06,000 tonnes is Rubber Board's estimated consumption for this financial year

In 2011-12, India imported 2,05,050 tonnes of rubber, against 1,88,387 tonnes in 2010-11. Considering the current pace of imports, these would likely exceed 2,50,000 tonnes by the end of the financial year.

For the current financial year, the Rubber Board has projected production at 9,30,000 tonnes and consumption at 10,06,000 tonnes, with an annual deficit of 76,000 tonnes. Industry experts told Business Standard the shortage might stand at about 1,50,000 tonnes, adding the government should allow free import of up to 2,00,000 tonnes. Otherwise, they said, industries, especially the non-tyre sector, would face a crisis. However, the Board does not see a shortage in the domestic market, as the projected opening stock in April stood at 2,36,275 tonnes and the rubber-consuming industry is mandated to import about 1,50,000 tonnes through duty-free channels. On September 30, the board had scaled down the stock projection to 2,25,000 tonnes. This is the first time projected consumption has stood at over a million tonnes. In 2011-12, production and consumption stood at 9,03,700 tonnes and 9,64,415 tonnes, respectively.

For this year, the International Rubber Study Group has estimated global production and consumption of natural rubber at 11.33 million tonnes (mt) and 11.20 mt, respectively, with a surplus of 1,37,000 tonnes. Production and consumption in 2013 are estimated at 11.83 mt and 11.68 mt, respectively, with a surplus of 1,51,000 tonnes. In the first half of this year, global production rose 4.3 per cent, while consumption rose 0.7 per cent. Consumption of natural rubber in the US and European Union nations fell nine per cent and 14.8 per cent, respectively, during the period. Growth in consumption in China was slow, especially in March and April, said an International Rubber Study Group report.

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