India tyre firms stop signing fresh rubber import deals

Reuters: Indian tyre-makers have stopped signing new natural rubber import deals as they are getting the raw material more than 15 percent cheaper in the local market, two dealers and one trade official told Reuters.

India, the world’s fourth-biggest rubber producer, imports mainly from Thailand, Malaysia and Indonesia.

“They (tyre-makers) are aggressively buying in the domestic market due to cheaper supplies,” said a dealer based in Kochi in southern state of Kerala, the biggest producing state in the country.

On Firday, spot price of the most traded RSS-4 rubber (ribbed smoked sheet) was 197 rupees ($4.36) per kilogramme (kg) in India as against 203 rupees ($4.5) per kg in Bangkok.

In the past one month, spot rubber price in India has risen by 1 percent, while that in the international market rose by 9 percent.

“Rubber is at least 15 percent cheaper in Indian market if you add import duty and freight charges, and calculate landed cost of imported rubber,” George Valy, president of The Indian Rubber Dealers Federation, told Reuters.

India charges 20 percent import duty on natural rubber.

In August, Indian rubber makers were charging a premium of as much as 35 rupees per kg over the Bangkok market, prompting Indian tyre companies to sign imports deals aggressively for shipment in September to December.

“Now the scenario is exactly the opposite. No one is signing import deals. Still we are getting rubber from old contracts. That will continue for next one month, but if the scenario remains the same, imports will be very low in January to March period,” said another dealer based in Kerala.

The country has imported to 143,468 tonnes of natural rubber in April-Nov, up 3 percent on year due to lower-than-anticipated local production.

India’s Automotive Tyre Manufacturers’ Association has estimated India’s 2010/11 tyre production to rise to a record 121.4 million units as companies boost capacity to meet booming demand from the local auto industry.

Rains to trim India’s 2010/11 natural rubber output

Reuters: India is likely to produce around 850,000 tonnes of natural rubber in 2010/11, down 4.8 percent from the earlier estimate, after heavy unseasonal rains affected tapping, a senior Rubber Board official said.

The world’s fourth biggest producer of natural rubber was previously expected to produce 893,000 tonnes, according to data from the state-run Rubber Board.

“Due to rainfall, number of tapping days have fallen significantly. We have seen impact of rains in October and November, and if rains continue in December, we can see further reduction in output,” the official, who declined to be named, said.

Rubber production in October and November fell by 7.6 percent and 5.3 percent on year, respectively, as the southern state of Kerala, which accounts for more than 90 percent of the total output, got excessive rains.

In 2009/10, a drought had trimmed India’s natural rubber production to 831,400 tonnes.

“We are expecting higher production in January to March period. That will offset some of the production losses in October-November,” George Valy, president of The Indian Rubber Dealers Federation, told Reuters.

Lower-than-anticipated production forced tyre-makers increase purchases from overseas, pumping up Indian imports between April-Nov to 143,468 tonnes, up 3 percent on year.

The spot price of the most-traded RSS-4 rubber (ribbed smoked sheet) rose 50 rupees to 19,650 rupees ($433.77) per 100 kg in the Kottayam market in Kerala on Thursday.

It had struck record high of 20,300 rupees last month.

Heavy rainfall in leading rubber producers will hit output for the rest of the year, the group responsible for 92 percent of global output said last month, keeping prices near record highs.