Rubber imports set to soar

Military junta of Thailand, world's largest exporter of rubber, recently decided to release 200,000 tones of stock pile

Natural rubber import is set to be more attractive for consuming countries, with rubber-producing countries gearing to offer more concessions to push the commodity. Thailand, the world’s largest exporter of rubber, recently decided to release 200,000 tonnes of its stockpile.  Vietnam’s finance ministry is considering slashing the rubber export tax down to zero from the current one per cent.

All this means more availability of the commodity at world markets, leading to a drop in prices. This will, in turn, result in more imports to consuming countries such as India. On Monday, the price of benchmark grade RSS-4 quoted Rs 127 a kg, while Bangkok price in rupee terms was Rs 107.

“In November 2013, Vietnam decreased the export tax for centrifugal rubber and synthetic rubber from three per cent to one per cent. Now it plans to further reduce it to zero levels. The price advantage will definitely favour more import to India this year,” said Rajiv Budhraja, director-general of Automotive Tyre Manufacturers’ Association (ATMA).

Budhraja told Business Standard it is not the price alone that would determine the quantum of imports, but local availability and quality, too, are major issues. However, this year, price along with higher availability in overseas markets would play a major factor. Experts are of the view that the total imports by India would cross 400,000 tonnes in the current financial year. During FY14, India had imported 325,190 tonnes against 217,364 tonnes in the previous year.

Notably, if India’s imports cross 400,000 tonnes, that would constitute 50 per cent of the country’s total production. According to the latest data of the Rubber Board, during the April-July 2014 period, 133,789 tonnes of natural rubber were brought into India. This is for the first time that rubber import has crossed 100,000 tonnes in just four months’ time.

During the first five months of this financial year, Vietnam exported 239,000 tonnes of rubber worth $472 million. Compared to the same period last year, export volume shrank 20.5 per cent, while revenue was 39.3 per cent lower. The country’s total revenue this year is expected to be 25-30 per cent lower than in last year.