Demand-supply gap to widen as rubber output falls

The natural rubber (NR) output in 2009-10 dropped 3.8 per cent to 8,31,400 tonnes from 8,64,500 tonnes in the previous financial year. But, consumption rose 6.8 per cent to 9,30,565 tonnes from 8,71,720 tonnes in 2008-09, indicating a widening demand-supply gap.

According to the Rubber Board, the consumption increased due to a rise in demand from the tyre sector. While major companies like Ceat, JK and Bridgestone Tyres commissioned capacity-expansion plans last year, Birla, Apollo and TVS Sri Chakra Tyres installed new plants. The board said expansion might continue this year as well.

The board’s provisional estimates show the total rubber stock in the country as on March 31, 2010 was 2,48,000 tonnes, as against 1,96,230 tonnes the previous year. But, these figures are not in line with the reality of the local market facing shortage of the commodity. Local traders and farmers believes the stock is in the range of 1,25,000-1,50,000 tonnes.

Consequently, rubber imports also increased 118.7 per cent in 2009-10 to 1,70,048 tonnes, as against 77,762 tonnes the previous year. The increase in imports can be attributed to the price difference in the domestic and international markets. Global prices were lower by almost Rs 17-18 a kg than the domestic prices in the first half of financial year 2009-10.