Tyre firms sceptical of Rubber Board's high stock estimate

Natural rubber consuming industries, faced with record high prices, are turning increasingly sceptical about the Rubber Board’s high inventory projection of 307,710 tonnes as on December 31.

The projection is not “very convincing”, said Rajiv Budhraja, director general, Automotive Tyre Manufacturers Association.

The record high spot prices belie the board’s estimate of huge stocks in the pipeline, he said.

At Rs 214.50 a kg, rubber prices have shot up by 86per cent from a year ago.

Natural rubber traders based in Kerala also concur with the views of the tyre industry.

The board’s output and inventory projections appear to be highly exaggerated, said N Radhakrishnan, advisor, Cochin Rubber Merchants’ Association.

The readily available stocks in the hands of growers and traders will not be more than 50,000 tonnes, he said.

According to Radhakrishnan, rubber output in the country has not shown any appreciable increase during the past few years.

By giving an optimistic picture at the beginning of the year, the board is actually concealing the stagnation in output, he added. In the past two years, the board was compelled to make a downward revision in its output and demand projections.

In 2009-10, it initially projected the output at 867,000 tonnes, but then scaled it down to 840,000 tonnes and later to 831,400 tonnes.

Demand was initially projected at 881,000 tonnes but revised upward to 930,565 tonnes.

The import projection was completely off the mark, as imports more than doubled to 170,769 tonnes from the projection of 80,000 tonnes.

The demand-supply projection for 2010-11 (April-March) was first made in February and revised eight months later in December.

The board initially projected output at 893,000 tonnes, but later scaled it down to 851,000 tonnes. Demand projection was cut down to 948,000 from 978,000 tonnes. In the case of imports, the board again was widely off the mark as in April-December itself imports touched 156,608 tonnes, double the projection of 70,000 tonnes made earlier.

Rubber consumers are equally worried about timely availability of the raw material, Budhraja said.

The board should streamline and fine-tune its data collection and dissemination methods, he said.

“We should have quarterly projections and an update on the output and demand for the previous quarters,” he said. The board currently gives updates only once a year, he added.