Natural rubber already accounts for about 50% of production costs in India, and since May-June the per kilogram cost of this sought after commodity has increased from RS 80 (£1.00) to Rs 90.75 (£1.13).
Apollo Tyres’ Onkar Kanwar believes an increase of this degree has the potential to reduce profits by 3% to 5%; to counter this his company is considering doubling its use of synthetic rubber.
The ratio of natural to synthetic rubber used by Indian tyremakers could therefore feasibly reach the magic ratio of 70:30 – the highest ratio technically practicable. Such measures were threatened earlier in 2007, but so far no manufacturer has utilised synthetic rubber to this degree in its products. In Europe the established ratio is 80:20, a proportion seen as not compromising the superior vulcanising qualities of natural rubber.
Recent figures (April to June 2007) indicate that the price of synthetic rubber is on average Rs 6 (£0.07) lower per kilogram than natural rubber, a significant amount for a company like Apollo, who has an annual natural rubber consumption of 150,000 tonnes.
India’s Automated Tyre Manufacturers’ Association (ATMA) reports that this upward trend in the percentage of synthetic rubber used has already begun. The association’s director general, D. Ravindran, claims that last year the average ratio used by tyremakers was 79:21, and this year it is more commonly 74:26. However ATMA does not intend to get involved in any discussions about the suitability of these ratios. “Ultimately, it is the decision of individual companies,” Ravindran added.
