RJA January-February 2014 Feature-Indian Rubber

Rubber Journal Asia Country Focus

Coming to terms with challenges India, the world’s fourth largest producer and

High imports versus low pricing he subdued NR price is not quite a welcome situation for local growers, and the sector has been blaming the surge in imports for the price drop.

This prompted the government to increase the import tariff to 20% effective December 2013. The new import duty is now fixed at 30 rupees per kg against the previous levy of 20 rupees per kg.

Rubber and tyre sectors groups have contested this move, saying that the hike in duty could also hurt manufacturers. Furthermore, they contend that the soft demand globally, and not the increase in import volume, has caused local prices to drop. Local prices are hovering around 150 rupees per kg.

The All India Rubber Industries Association (AIRIA) says that the excess of about 20,000 tonnes derived from the increased imports during the AprilDecember period is not significant enough to affect local prices, neither is it sufficient reason to prompt a hike in import duty.

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third largest consumer of natural rubber, is currently grappling with high imports to fill the supply-demand gap for natural rubber, among a host of other challenges. On the other hand, stakeholders are teaming up to resolve these issues, and new investments are expected to perk up the industry, according to Angelica Buan.

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arly last year, natural rubber (NR) production in the country was curtailed by monsoon rains, easing off with the tapping season ending in January.

For this reason, the tight domestic supply has led to yet a round of increased imports, especially since globally rubber prices are dropping. Tyre makers, in particular, benefit from the price drop, since NR Pitted against SR accounts for more than 40% of the cost and make-up he low production of NR also provides the of a tyre. opportunity for synthetic rubber (SR) to whisk Based on recently released data from the Indian off a substantial market share.

Rubber Board (IRB), from April-December, NR According to a new report from GlobalData, there imports increased from 91,135 tonnes to 264,576 is a burgeoning demand for SR in India stimulated tonnes, compared to the 173,441 tonnes imported by the country’s rapid urbanisation. The local over the same period a year earlier. On the other tyre sector is the largest end-use sector, especially hand, the decline in domestic NR production in the Styrene Butadiene Rubber (SBR) that accounts for same period was 70,200 tonnes, leaving a net excess 40% of the total synthetic rubber consumption. The of only 21,843 tonnes. rising need for SR is also encouraging new plants to According to the Association of Natural Rubber be built to provide additional capacity.

Producing Countries (ANRPC), the country imports According to 2011 data from the International from Thailand, Indonesia and Malaysia – the latter Institute of Synthetic Rubber Producers (IISRP), being the largest exporter. It is also the world’s third India has an output of only 128,000 tonnes/year. largest rubber consumer, following China and the Thus, India is naturally deficient in the synthetic US. material.

IRB noted that demand for NR on the home Based on 2011-12 data from the IRB, India’s SR front has not increased consumption jumped significantly. The slump “….the subdued NR price is not by 6% to 226,000 tonnes in Indian automobile in the first half of quite a welcome situation for sales, as the country 2011-2012 fiscal year, faces a period of inflation while production rose local growers, and the sector and weak economy, also marginally to 54,778 has been blaming the surge in stagnated NR demand, tonnes. The domestic consequently keeping consumption was imports for the price drop…..” rubber prices down.

213,000 tonnes from Citing data from April-September in the Society of Indian Automobile Manufacturers the 2011-12 fiscal period, while production was (SIAM), automotive sales fell 9.6% to approximately 54,750 tonnes. During the period, the tyre industry’s 1.8 million units in 2013. The group does not see the consumption increased by 8% to 167,000 tonnes from situation improving over this year. the previous year’s 155,000 tonnes.

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Rubber Journal Asia Country Focus In the middle of last year, the rubber industry saw the need for a national policy that would touch on issues like supply and demand projection as well as address duty inversion and other issues important to growers.

Likewise, the small-scale manufacturers are also pressed with high input costs, inverted duty structure, cheap imports and anticipated effects of the Free Trade Agreements (FTAs).

Meanwhile, IRB has devised a scheme whereby the country’s NR products will be encouraged to achieve world-standard quality by branding.

Launching of the Indian Natural Rubber logo by Sri Oommen Chandy, Kerala Chief Minister with IRB officials

The Sibur/Reliance joint venture butyl rubber plant is expected to start up this year

Reliance Sibur Elastomers, the joint venture between Russian petrochemical firm Sibur and Indian conglomerate Reliance Industries is the country’s first manufacturer of butyl rubber. The facility located in Jamnagar, Gujarat, will have a capacity to provide some 100,000 tonnes/year synthetic rubber when it becomes operational this year. The country currently sources its butyl rubber from the US, Central Asia and Europe.

In December last year, Taiwan Synthetic According to Suresh Babu of IRB’s Market Rubber Corporation (TSRC) and Japan’s Promotion Department (Indian Natural Rubber), India Marubeni Corporation formed a partnership is the first in the world to brand its natural rubber. with the Indian Oil Company (IOC) to establish “India has started the export of branded NR only a styrene butadiene rubber (SBR) plant at IOC’s recently, during the 2011/2012 period. This means, the Panipat refinery. scheme is still in the Known as Indian developing phase. It Synthetic Rubber (ISRL), “….IRB has devised a scheme may also be noted that it is the first and largest no other country in the whereby the country’s NR naphtha-cracker plant world has adopted such in the country with a a branding system for products will be encouraged to capacity of 120,000 tonnes NR,” Suresh told PRA. achieve world-standard quality of SBR, targeted mostly

A seal or logo for the automobile and is used for rubber by branding….” tyre industries. The products that have country is also importing been certified to have SBR to meet domestic demands. conformed to set standards.

India is expected to achieve self-sufficiency Exporters who participate in the branding scheme in SBR with the operation of the ISRL facility, are allowed to use the logo on all their produce. “Less according to a report released this year by Fast than 50 exporters in India have registered so far for Market Research. the NR branding,” Suresh said.

While the logo signifies trust and quality for the Game plan products, will the branding push up revenues for the eanwhile, the government is working on a Indian rubber industry? national policy to respond to the issues faced “Since the scheme is still in its infancy stage, we by the rubber industry, most especially the NR have not yet assessed the (earnings) aspect, but in producers. one or two years time of the branding adoption, we A draft of the national policy is underway, would be able to evaluate its benefits. Nevertheless, with an inter-ministerial panel comprising all the Rubber Board will start conducting its assessment stakeholders working on the details. soon,” he said.

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