The rubber tree, here and abroad, finds fewer takers

With crude prices moving downward, industrial users are moving towards synthetic rubber

A sharp increase in the consumption of synthetic rubber (SR) across the world is a serious threat to natural rubber (NR), say experts.

With the price of crude oil consistently moving downward, SR (it is synthesised from petro products) is more attractive to both tyre and non-tyre sector manufacturers. European manufacturers are using more SR and the trend is being replicated in major rubber producing countries, such as in India. This is one important reason behind the steep fall in the price of NR over two years.

In India, till some years earlier, 80 per cent of total rubber consumption was of NR. This is now no more than 70 per cent.

Compared to the second quarter (Q2) of 2013-14, SR prices dropped 15 per cent in Europe and five per cent in America in the same period this financial year.

In India, shows Rubber Board data, SR production rose 40 per cent in April-May (Q1 of the current financial year), compared to that in 2013-14. Output of NR dropped 7.1 per cent in the period.

India produced 24,368 tonnes of SR as against 17,390 tonnes in April-May period of 2013-14. NR production dropped to 104,000 tonnes in April-May as against 112,000 tonnes last year. India produced 112,886 tonnes of SR in 2013-14, roughly 13.4 per cent of the total NR production.

And, SR consumption rose 5.6 per cent during April-May (to 84,575 tonnes), while the rise in that of NR was only 0.6 per cent. Total SR consumption in 2013-14 was 483,575 tonnes. A total of 371,839 tonnes of SR was brought into the country during 2013-14, while the total consignment of NR was 325,190 tonnes.

In sum, as with the global trend, India is also slowly switching to use of SR. According to estimates, European manufacturers are using 60 per cent SR and 40 per cent NR. In India, as mentioned earlier, it is 70:30 in favour of NR -- the latter is still cheaper. Even so, it was 75:25 four years earlier.

The global shift, say experts to SR is due to quality upgradation for different end-uses. An expert told Business Standard the comparative research and development in NR was weak. If this continues, the shift in favour of SR would go on. The fall in crude oil prices would aid this.