IIP accelerates and rubber demand expected to expand 5%

The growth in Index of Industrial Production (IIP) witnessed a pick-up in March and grew by 2.5% y-o-y as compared to 0.6% y-o-y growth registered in February. During March, manufacturing grew at a robust 3.5%, while electricity growth moderated to 3.2% and mining production contracted 2.9%. In terms of industries, 10 of the 22 industry groups in the manufacturing sector showed positive growth in March as compared with the corresponding month of the previous year.

The recovery in global economic growth is expected to be slower than earlier expectations. Rubber demand is forecast to expand 5% to 1.02 million tonnes this year, while production may climb 5.2% to 960,000 tonnes. The shortfall will be met from stockpiles and duty-free imports by some users, who are allowed to import some quantity without any import tax. The biggest slump in car sales since 2001 last year boosted local rubber stockpiles 13% to 2,66,000 tonnes, and will make up for a domestic shortfall in supplies. Natural rubber imports are poised to drop for the first time in five years from a record as declining car sales crimp demand for natural rubber. Bearish sentiments are reported to weigh on the natural rubber market in the near future, said Sheela Thomas, chairperson of Rubber Board of India.