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Natural rubber sector on a sticky wicket

The market recovery of India’s natural rubber sector will fully depend on how the economy is going to rebound in the next three quarters, according to the Rubber Board.

‘The market situation is very fluid now with consumption of natural rubber falling drastically. The price and market recovery of the commodity rely on how quickly the market is going to rebound, which any way is going to take next say 3 quarters,” Rubber Board executive director K.N. Raghavan told The Hindu.

The total requirement of domestic tyre manufacturers for natural rubber is expected to fall to 9 lakh metric tonnes this fiscal from last year’s 11.4 lakh MTs. In this context, there’s no need for the country to import rubber, he pointed out.

With COVID-19 severely impacting the operations of the automotive sector and related industries, the natural rubber requirement of tyre companies is likely to fall to 9 lakh MTs this year, although automotive and tyre companies predict even lower consumption, which means the net gap between production and demand will be only 2 lakh MTs this year. Also, the industry has a carry forward stock of 3.5 lakh MTs and therefore India need not import any rubber this year, said an official in charge of production data at the Rubber Board.

According to the Board’s statistics, the country produced 7.10 lakh MTs of natural rubber during fiscal 2019-20, as against the previous year’s production of 6.53 lakh MTs. Some 70% of this produce is consumed by the tyre industry, while the rest goes into the non-tyre sector such as rubber bands, tubes and footwear.

Under a normal industry scenario, the tyre manufacturers in the country consume around 1 lakh MTs of natural rubber a month and 12 lakh MTs a year. The difference, between the production and consumption, is imported mostly from Indonesia, Malaysia, Vietnam and Thailand. Last fiscal, the country imported 4.65 lakh MTs of natural rubber.

In order to minimise the impact of significant shrinkage in consumption also to create new avenues of usage for natural rubber, the Rubber Board is currently in the process of planning a series of activities.

Mr. Raghavan said, “When there is a market slowdown, it is important to create newer avenues to increase the scope of usage of natural rubber. We are setting up an incubation centre where small and micro entrepreneurs can learn to design and develop new rubber products and utilities. Natural rubber can be an ideal replacement for plastic and other materials in most cases. We are also working with The Dermatological Society of India to increase the usage of natural rubber based products in the healthcare sector.’’

The Rubber Board has reported a production loss of 65,000 metric tonnes in April and May.

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