Tyre Industry Set to Take Larger Slice of India’s NR Cake

The share of natural rubber consumed by the tyre industry in India is likely to increase in the years to come, says the Automotive Tyre Manufacturers Association (ATMA). At a presentation in the city of Kochi, ATMA director general Rajiv Budhraja commented that the consumption of natural rubber by the tyre sector has been consistently increasing, and at present the sector consumes 57 per cent of all natural rubber produced in India. However he added that demand-supply imbalanced and volatile prices in the domestic natural rubber market might cause the tyre sector to become more dependent upon imported rubber in the future.

A delicate balance exists between domestic production and consumption, said Mr. Budhraja, and this is expected to put further pressure on natural rubber availability and cause price fluctuations. Currently, Indian domestic natural rubber prices are higher than international prices, and even at these high prices the availability of natural rubber is a major concern for rubber consumers.

Currently India is the world’s fourth largest producer as well as fourth largest consumer of natural rubber. There is a need for natural rubber producing and consuming interests to develop together in order to assure long-term sustainability, the director general said. Unfortunately for India, as ATMA analysis reveals, the country’s share in natural rubber re-plantations in South Asia is fast declining and long-term difficulties may await rubber consuming industries if immediate steps are not taken. India’s share in natural rubber re-plantation in South Asia is now one third of what it was in 2004; while its share in the total area of natural rubber planted in South East Asia continues to be 7.5 per cent, its share in natural rubber replanting has come down from more than 10 per cent in 2004 to 3.6 per cent in 2007.

The ATMA has attributed this decline to an unprecedented rise in the natural rubber prices in recent times. In the past year alone natural rubber prices in India have risen 65 per cent, from Rs 85 (£1.04) a kilogram in September 2007 to Rs 140 (£1.72) a kilogram. And although in the recent past, rising natural rubber prices have been directly or indirectly linked to increases in crude oil prices, the recent drop in crude oil prices has not been matched by a corresponding reduction in natural rubber prices, said Budhraja.