Automotive Tyre Manufacturers Association (ATMA) on Wednesday urged the Rubber Board to urgently intervene to resolve supply crunch in domestic natural rubber market.
With the onset of lean season in natural rubber (NR) tapping, tyre industry has started feeling the pinch of tight availability of rubber especially ISNR (Indian Standard Natural Rubber) grade in the domestic market.
In a communication to Rubber Board, ATMA has stated that limited quantities which are available with the dealers are not being supplemented by arrivals from growers as a result interrupting smooth flow of the commodity from the growers to the end consumers. Having stayed behind international prices for about three months, domestic NR prices have once again started to overtake the international prices. The present RSS 4 prices are ruling at Rs . 162 per kg, while international prices are lower at Rs 157 and Rs 146 for SMR 20 (Standard Malaysian Rubber) grade.
"What is adding to the supply crunch situation is the fact that domestic prices have started rising and have once again overshot the international prices. Normally when the price trend is rising, growers tend to hold on to the commodity in the hope of fetching still higher prices leading to supply side constraints. Unfortunately, that leaves the rubber consumers with no other option but to contract imports," said Rajiv Budhraja, Director General, ATMA.
According to ATMA it is surprising an erratic supply in NR is being experienced despite the presence of an unprecedented high quantity of stock in the country (about 300,000 tonnes) as claimed by the Rubber Board. Of the NR stock, the growers have a record 133,000 tonnes in January 2013, which is 35 per cent higher than the January 2012 stock of 98,000 tonnes. ATMA said that stock with tyre manufacturing units is 52,000 tonnes which will meet demand for just 30 days production.
In a letter to the Rubber Board chairman, Rajiv said that with the onset of lean production season, going forward, supply will be uncertain and erratic. He urged the board's urgent intervention on the issue.
ATMA has expressed concern over erratic and uncertain availability of rubber and has appealed to the board for immediate redressal of NR availability issue.