As the tapping season in the main producing state of Kerala is coming to a close, the rubber shortage will only get worse
There are growing concerns in India's tyre industry about the continuing shortage of natural rubber in the market at a time when the automobile sector is showing signs of revival.
Ashish Pandey, VP-materials at J K Tyres was quoted by ET as saying:
"Despite Rubber Board data showing higher production this year, the flow of rubber into the market has not been steady,''
The Rubber Board had earlier estimated a 10% year-on-year increase in natural rubber production in the eight months to November 2019. However, for some reason the stock has failed to reach the market despite the increase in the capacity of rubber plantations.
Industry insiders feel that the only plausible reason behind this could be that the growers are holding their stock.
However, Josch Joseph, secretary at Consortium of Indian Rubber Growers Association, disagreed. "The growers do not have the capacity to hold for a long time,'' he said.
According to Joseph, the growers are not holding their stock but are infact staying away from tapping. Delays in payment of arrears under the Kerala government's price incentive scheme seems to have discouraged small growers from going for tapping.
"Most of them have stayed away from tapping as they have not got payment for the last 6-7 months,'' he said.
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As the tapping season comes to a close in the main rubber producing state of Kerela, the shortage is bound to get worse. An increase in temperature has brought about a reduction in rubber yield, pushing prices up. Sheet rubber prices have risen 2% in a week to 137 per kg.
Since December, imports have gone up significantly in the tyre industry in order to cope with the "rubber drought" that the industry faces. A further increase in imports is expected as the shortage worsens and the revival in the automobile sector continues.
"We saw some positive signals in January and the demand (automobile sector) was better than in the previous few months. We hope the trend to continue in the coming months," said Pandey of JK Tyres, adding that the consumption is generally subdued in the last quarter of the fiscal year.
Mr. Pandey also remarked that since the industry is better prepared to deal with the shift to BS-6 emission norms for vehicles, the demand has not taken a hit. "Already several companies have started launching BS-6 vehicles," he said.
Source: Economic Times
