India stares at record rubber import

ERJ staff report (TP)

Mumbai, India − Natural rubber imports by India, the world’s third-biggest consumer, will surge to a record this year after monsoon rains cut production and as tire makers increased purchases because of a decline in global costs, reported Swansy Afonso for Bloomberg.

Shipments will probably climb 38 percent to 300,000 tonnes in the 12 months through March from 217,364 tonnes a year earlier, said Rajiv Budhraja, director general of the Automotive Tyre Manufacturers Asso¬ciation. Imports jumped 53 percent to 264,576 tonnes from April to December from a year earlier, according to data from the state-run Rubber Board.

Purchases are rising for a fifth straight year, as futures traded in Tokyo declined 16 percent in the past 12 months. Tire companies accelerated imports after prices dropped in producing countries such as Thailand, prompting the government to increase the tax on shipments last month to protect domestic growers.

“Imports are here to stay,” said Budhraja, who is a member of the Rubber Board. “The actual output is expected to be lower than the reported figure and this can be seen by the tightness in supply in the domestic market even though consumption hasn’t grown much.”

Production fell 10 percent to 627,000 tonnes in the nine months through December as consumption slid 2 percent to 728,080 tonnes, data show. “Heavy rains from July to September cut latex output” said Budhraja. The board predicted in May a 5.2 percent increase in output to 960,000 tonnes in the year through March and a 17 percent decline in imports to 180,000 tonnes.

“In the next two quarters, tire companies will be able to maintain healthy margins because rubber prices have been declining,” said Surjit Singh Arora, an analyst with Prabhudas Lilla¬dher in Mumbai. “If the domestic rubber growers decide to hoard supplies as prices are falling and the cost of production is rising, then tire companies may once again buy more from overseas.”

The benchmark RSS-4 rubber in India fell 5.5 percent to Rs 154 (€1.84) a kg in the last year, according to the board. Futures in Tokyo traded at 253 yen (€1.79) a kg on Saturday (18 January). Prices in India averaged $2.8 (€2.06) per kg in the nine months through December versus $2.51 (€1.85) in Tokyo, according to Bloomberg data.

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