Tyre firms question deficit figures from Rubber Board

Kochi: Tyre manufacturers have expressed fears that the supply deficit in natural rubber during the current financial year that ends March 2011 would be twice the projection given out by the state-run Rubber Board.

Rubber Board has projected the supply deficit to touch 85,000 tonne in 2010-11 based on incremental production of 70,000 tonne during the year, while the Automotive Tyre Manufacturers Association (ATMA) claims that the consumption estimates of the board are rather conservative.

“We estimate the deficit to soar to 1,75,000-1,80,000 tonne which is almost double the projections of the board. Our estimate is driven by consumption growth which is more reliable. We estimate consumption to grow by 12-15%, while production would fall short at 5-6% growth,” Rajiv Budhraja, director general of ATMA said.

The shortfall in natural rubber would lead to higher rubber prices which if passed on to the customers will trigger inflationary trends in the entire value chain of transport sector, he added.

Tyre manufacturers have asked the Centre to move on to a fixed tax on imports of natural rubber rather than the existing ad valorem. They said new entrants into the field like Michelin and Yokahama, would increase the demand for rubber leading to a situation where the availability of rubber would constrain production and profitability.

The tyre industry is also asking for duty free import of 2 lakh tonne of natural rubber to ‘cool off’ the rising prices. Natural rubber prices have touched an all-time high of Rs 180 per kg, an 80% increase over the average June, 2009, price of Rs 100 per kg.

The industry has been held “hostage” to extreme uncertainty in terms of pricing and availability of rubber, causing production disruptions and planning in disarray, Kaushik Roy, Convenor of ATMA Raw Materials Group said. The board has overlooked the huge capacity addition coming up in the near-term, he added.

ATMA estimates that during 2010, Modi, Birla Tyres, Apollo and Ceat would need more rubber due to capacity addition, while in 2011, Michelin and Yokahama are expected to start production in India. Most of the natural rubber stock in the market is fresh stock. The industry does not find any evidence of the 2 lakh-tonne-plus buffer stock as stated by the Rubber Board, Roy said.

(financialexpress.com)