Tyre industry, which was frowning at the growing gap between domestic NR (natural rubber) production and consumption, has finally acknowledged the Rubber Board of India’s rollback of NR targets for the next year. With the tyre demand running on rough terrain, the tyre companies are resigned to the corresponding shrink in rubber supply chain.
“The downward revision undertaken by Rubber Board in respect of NR consumption, is in line with the tyre industry’s view. The demand for tyres is under pressure, in view of slowdown in the automobile industry,” Rajiv Budhraja, director general, Automotive Tyre Manufacturers Association (ATMA) told FE. “Even the replacement demand has declined. So, the tyre industry is looking at lower production volumes this year,” says Budhraja.
Earlier, ATMA had several times expressed disapproval at the falling domestic NR production, that nudged the tyre industry to resort to imports, to feed more than 50% of the domestic rubber industry’s raw material requirement. It was only in July 2019 that tyre firms went to Union commerce ministry to point out that the NR demand–supply gap had widened from 7,220 tonne in 2008 to 5,69,940 tonne in 2018, at a whopping CAGR of 40% in the last 10 years. This move, was, before the distress in the automobile industry.
According to Rubber Board, the production in 2018-19 was 6.51 lakh tonne, a negative growth of 6.2%, as compared to a slight positive growth of 0.4% in 2017-18. The projection of NR production for 2019-20 has been revised to 7.30 lakh tonne.
India’s NR consumption had fallen 7.6% during April-September 2019 to 5,67,120 tonne from 6,14,040 tonne in the same period in 2018. Consumption of NR is projected at 11,40,000 tonne in 2019-20. The rubber growers’ continued grouse of blaming the rubber imports does not hold much water this time. NR imports in 2019 ( April-September) at 2,57,943 tonne (provisional estimate) too dropped by 13%, compared to that in the previous period. By Rubber Board’s latest projections, the estimate of NR imports in 2019-20 has been rolled back from 5 lakh tonne to 4.15 lakh tonne.
Sawar Dhanania, chairman, Rubber Board, sees the fall in NR demand as a global phenomenon. In his address at a Rubber Board meeting of stakeholders in Kottayam, Dhanania attributes ‘the volatility in NR market to weather conditions, currency movements, oil price variations and speculative factor’. However, he is optimistic ‘the developing and emerging economies would recover and be in a sustained growth path’ sooner or later.