Oil prices have been on a very gradual downward trend since April and have been brought down by the continuous poor economic reports, from the US, Europe and China. Oil prices fell sharply fearing that global economy is headed for a double dip recession and wave of economic crisis will significantly reduce global energy demand.
Auto industry has slowed down due to high fuel cost and hike in the interest rates. Rubber prices have also soared, affecting production of tyres. The increase in the raw material prices has affected the rubber industry. Removal of anti-dumping duty on Chinese tyres has damaged competitive environment in Indian tyre industry. There is uncertainty in the industry because of the competition posed by the Chinese tyre companies. Chinese tyres come 20% cheaper compared to Indian tyres. In the coming months, tyre companies will struggle to hold on their own and many of them may see red in their balance sheets.
While addressing the media persons at the 59th AGM of All India Rubber Industries Association at Chennai, Rubber Board Chairperson, Sheela Thomas, said rubber production is set to increase to 9.02 lakh tonnes and the consumption will be over 9.77 lakh tonnes during the year. The industry believes the estimates of shortfall by the board are conservative, and the board had launched a separate survey to assess the natural rubber stocks. The findings of the sample survey is expected to be out in October.
The Rubber Board is projecting a 75,000 tonnes shortfall in availability of natural rubber this year. The President of All India Rubber Industries Association, Vinod Simon, said securing the natural rubber is the single largest concern for the industry. While long term initiatives could include expansion of plantation areas. Government needs to be supportive on short term measures like facilitating imports. The prevailing import duties need to be brought down as costs are increasing and the shortfall cannot be bridged at current rates.
The price of RSS3 grade natural rubber in the international market at Bangkok today closed at Rs 219.74 per kg., SMR-20 closed at 216.50 a kg at Kuala Lumpur and on the other hand domestic RSS4 grade closed at Rs. 211 a kg at Kottayam. At the National Multi Commodity Exchange (NMCE), rubber future prices for October delivery closed at Rs 212.07 per kg. At Tokyo Commodity Exchange futures prices for October delivery closed at 297.70 yen/kg.
Read lot more in Rubber4U – 1st October 2011 issue
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