Financial Daily from THE HINDU group of publications
Thursday, Jun 20, 2002
Agri-Biz & Commodities
Industry & Economy - Tyres
ATMA calls for urgent meeting on rubber prices
KOLKATA, June 19
THE Automotive Tyre Manufacturers' Association (ATMA), in an urgent representation to Mr S.M. Desalphine, Chairman, Rubber Board, has expressed serious concern over the spiralling natural rubber (NR) prices in the domestic market in the last two months.
The association has urged the board to call a meeting of organisations concerned such as ATMA, AIRIA, Apexil and rubber producers' associations at the earliest to discuss the key issues concerning both producers and users of NR.
Seeking some counter-action to ensure that natural rubber prices do not touch unwarranted levels in the near future, the association has pointed out that a surge in market prices had occurred at a time of full tapping in Kerala, where reportedly monsoons have already set in.
It is also suggested that the two issues of natural rubber stocks and the market price spiral cannot be looked at in isolation of the issue of ban on duty-free import of natural rubber under advance licence.
Industry fears are that the rains may affect tapping, and to that extent, less inflow of rubber into the market may result, putting further pressure on domestic prices.
According to Mr D. Ravindran, Director-General of ATMA, since natural rubber prices fluctuate, depending on a number of factors, it may be extremely difficult for anybody to estimate the price level after a month.
In the backdrop of steadily rising natural rubber prices, the association has drawn the Rubber Board Chairman's attention to the perennial controversy of rubber stock levels in the country. On the stock level, what seems to be bothering the association was whether anybody was holding back or hoarding rubber. While admitting that as per market intelligence, nobody was holding back rubber, ATMA has raised certain key issues that were puzzling to industry.
According to Mr Ravindran, if the rubber stock was actually as high as reported, then it must obviously contain old rubber, which should come into the market at some time or the other. But the experience of the tyre companies, according to him, was that they get fresh rubber all the time.
ATMA, quoting from the Rubber Statistical Bulletin of March 2002, has pointed out that the stock of natural rubber at the end of January 2002 was 2,47,900 tonnes as against the stock level of 2,21,700 tonnes at the end of January 2001. The higher stock, it is felt, could be partly explained as being on account of higher level of imports.
Suggesting that the current price surge seemed to have no correlation, as such, to the estimated stock level, if one were to assume that the level reported is in tune with ground reality, ATMA is of the view that but for the higher level of import of natural rubber, the market price today would have gone up to still higher levels.
According to Mr Ravindran, when the market price was much higher than the MSP and the benchmark price, what could be the justification to continue the ban on imports under advance licence? He also felt that this might be the best time for reviving the Rubber Subsidy scheme for exports, especially since preliminary discussions on this have already taken place between the rubber consuming industry and the Rubber Board.
The association has also stressed on the need to review the proposals for export of natural rubber. Urging the Rubber Board to take a holistic view of the situation, it is pointed out that if export is going to further aggravate the market price situation, then "it stands to reason that export has to be linked to the present and emerging scenario."
According to ATMA, sufficient availability of natural rubber in the country, going by the stock level route, had been quoted by State, Union Governments, politicians and growers' associations to decry imports of natural rubber. Then, would it not be legitimate for the rubber consuming industry to question import of natural rubber based on the spurt in prices of this commodity in the domestic market, the industry bodies point out.
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