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Our Bureau

30,000-40,000 tonnes likely to arrive in next 3 months

Chennai , Jan. 5

Concerned over rubber prices ruling unusually high during December, tyre manufacturers plan to import 30,000-40,000 tonnes in the next three months.

The first consignment is expected to arrive by the third week of this month, according to the New Delhi-based Automotive Tyre Manufacturers' Association (ATMA). The association is a body that represents major tyre manufacturers in the country.

Also, the association has approached the Union Government to slash the Customs duty on natural rubber imports to 10 per cent from 20 per cent to make the imports economical.

The move by the tyre manufacturers is against the "unusually" high prices for rubber in December and now. Usually, October to February is the peak production for rubber and prices are seen softening. But this time, prices have tended to rise and market players see vested interests behind the rise. Besides, some growers are also reportedly holding on to stocks, expecting the prices to firm up further.

As rubber makes up 42 per cent of the cost of raw materials consumed by the tyre manufacturers, any rise in its prices will impact production costs.

In a press release, ATMA said taking into account the annual consumption of 4.4 lakh tonnes rubber by the tyre industry, a price increase of Re 1 a kg imposed a financial burden of Rs 44 crore on the sector as a whole. The average price of rubber during April-November was Rs 63,000 a tonne and it increased to Rs 91,000 in December.

"On an annual basis, this has placed huge financial burden of Rs 1,200 crore on the tyre industry, crippling the viable functioning of the tyre industry," the association said.

"Fundamentals of natural rubber, i.e., production, consumption, import, export and stock do not support the tight market availability and steep price increase during the last few months. According to the assessment of Rubber Board also, the increase is not based on fundamentals," it said.

Caution against hoarding

Alleging hoarding of rubber, the association said it had led to extreme tightness in availability and soaring up of price.

Concerned at this development, the Rubber Board had issued a statement on December 18 cautioning growers against the manipulations of some vested interests in the market and urging growers to unload rubber in the market.

"However, the ground level position has not improved. This has forced the tyre industry to go ahead with large-scale imports, lest tyre production is affected and also to bring the price to reasonable levels," it said.

The association has appealed to the Centre to take measures to check hoarding of rubber.

More Stories on : Rubber | Tyres | Exports & Imports

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