India Rubber Imports More Than Double on Tire Demand

By Thomas Kutty Abraham

April 6 (Bloomberg) -- Natural rubber imports by India, the fourth-biggest producer, more than doubled last year after tire- makers boosted output to meet increased demand from auto makers, the state-owned Rubber Boardsaid.

Purchases surged to 170,048 metric tons in the year ended March 31, from 77,762 tons a year earlier, the board said in an e-mailed statement today. Rubber demand expanded 6.8 percent to 930,565 tons in the period, it said.

Natural rubber prices in India reached a record yesterday on concern that the low-output season in the largest producing nations will worsen a deficit.Bridgestone Corp. said last month it will spend 50 billion yen ($540 million) on a second plant in India, joining local rivals Apollo Tyres Ltd. and Ceat Ltd. in adding capacity to benefit from rising automobiles sales.

“The tire industry is booming at a time when rubber output is headed down,” Geevergees P.V., general manager at Periyar Latex Ltd., a rubber trader, said by phone from Kottayam in the southern state of Kerala. “Imports will continue to rise as tire companies expand capacity and prices will further climb.”

Rising salaries in the world’s second-fastest growing major economy may more than double annual car sales to 3 million by 2015, the government forecast in 2006. That has prompted Ford Motor Co., Volkswagen AG and other automakers to expand plants and introduce new vehicles in the country.

“Tire makers will find it hard to secure all their needs in India,” Geevergeese said. “Rubber yields are going down because of global warming.”

Tire makers may boost imports to 200,000 tons this year, he said. Rubber prices may jump 25 percent to 200 rupees a kilogram from a record 160.55 rupees a kilogram yesterday, he said.

Tire Prices

Higher costs have prompted manufacturers including Apollo and JK Tyre & Industries Ltd. to raise prices for a second time this year, and their shares are among the best-performers on the country’s stock exchanges.

Apollo Tyres has more than tripled in the past year and JK Tyre has surged almost five times in the period. Ceat has jumped almost fourfold, according to the data on Bloomberg.

Futures in Tokyo today advanced to 329.2 yen per kilogram ($3,497 a ton), the highest price since Aug. 1, 2008. The most- active contract pared gains to trade at 325.20 yen at 2:44 p.m. in Tokyo. April-delivery futures on the National Commodity & Derivatives Exchange Ltd. in Mumbai gained 1 percent to 160.55 rupees a kilogram yesterday.

India’s rubber production last year dropped 3.8 percent to 831,400 tons, the rubber board said. Output last month rose 5 percent to 50,650 tons, it said.

Stockpiles rose 26 percent to 248,000 tons at the end of last month, compared with 196,230 tons a year earlier, the board said. Exports fell 49.4 percent to 23,764 tons, it said.

(bloomberg.com)