India’s natural rubber production will likely be five per cent lower this fiscal in view of deficient rainfall in Kerala, which accounts for over 90 per cent of the industrial commodity’s production, said Ramesh Kejriwal, President, All-India Rubber Industries Association (AIRIA). 

“The rubber growing area will be down by 10 per cent. At the same time, since the Government has been planting more it could make up for some of the production loss. Production in the North-East will also make up to some extent,” Kejriwal told businessline in an online interaction.

According to the India Meteorological Department, the deficit in the South-West monsoon rainfall this year in Kerala is 41 per cent as of September 13. Between July 26 and August 23, the rainfall deficiency was above 80 per cent. 

Rising imports

Data from the Rubber Board show that rubber production in the first quarter of the current fiscal was 1.39 lakh tonnes (lt) against 1.38 lt a year ago. 

The drop in production could result in imports increasing this fiscal. Last fiscal, natural rubber imports into the country decreased to 5,28,677 tonnes against 5,46,369 tonnes in 2021-22. In the first quarter this fiscal, shipments into the country were down at 1,21,779 tonnes compared with 1,23,497 tonnes a year ago. 

Prices hit 8-month low

However, the major concern for the stakeholders is the drop in prices to an eight-month low. 

“The impact of the price fall is felt more in the rural areas, where people are solely dependent on rubber cultivation. Therefore, either they may switch to other crops or they have no other option but to cut expenses.

The impact could result in small and medium enterprises facing an uncertain future and suspend production, Kejriwal said. 

The current fall in natural rubber price is due to weak Chinese demand and the European energy crisis, he said. 

The low price, however, will help in the tyre and non-tyre sector recover their margins in the second of the current fiscal, the AIRIA president said. 

On Wednesday, RSS-4 was quoted at ₹146.50 a kg in Kottayam. The comparable global price of RSS-3 was ₹131.14. 

“The industry will see a margin markup in the second half of this financial year riding on the back of a significant softening of raw material prices,” he said.

Positive outlook

Natural rubber prices are down 12 to 34 per cent from the first quarter of last fiscal, while synthetic rubber and carbon black prices too are showing signs of softening. On the global market growth, he said it was expected to grow at a CAGR of 5 per cent during 2023-28. “The market is expected to be driven by uses of rubber in different industries, including aerospace, medical, defence, printing, automotive and agriculture. North America, Europe and Asia are likely to be key markets,” Kejriwal said.

Stating that sustainable rubber production is here to stay, he said it can help businesses reduce their environmental impact, meet consumer demand, and stay ahead of the curve in the rubber industry.

Rubber is being recovered from discarded tyres, industrial scraps and other products. These are processed and transformed into rubber mats, playground surfaces and tracks for athletes, the AIRIA president said. 

Advances in rubber technology have resulted in innovative applications, he said recycling and waste reduction are reducing environmental impact and cutting production costs. “Additionally, rubber recycling can create new opportunities for businesses to create value-added products from recycled rubber,” Kejriwal said.

The outlook for the Indian rubber industry is positive. It has a huge potential and the non-tyre sector is likely to double its exports from the current $2 billion by 2025, he said.   

 “With countries abroad looking to India, the potential for the country was huge. We are trying to impress upon the government to come out with a productivity-linked incentive scheme for rubber industries too,” Kejriwal said.