Industry officials say the situation could continue up to mid-September or even until end of the month, compelling them to import.
“Due to the shortage in supplies, our inventory has been reduced to cater to only 8-10 days of production as against the normal level of one month of stocks that we maintain,” said Koshy Varghese, vice president, MRF Ltd.
Even though prevailing prices in the international market are lower by Rs 10 a kg compared with domestic prices, he said the import duty at 20% on natural rubber being higher than the 10% duty on shipping the tyres into the country was making it difficult for companies to import.
“The situation is likely to improve only by mid or end of September. The tight domestic supply is compelling companies to buy from international markets such as Malaysia, Thailand and Indonesia,” said Kaushik Roy, head of purchases at Apollo Tyres.
He said since international supplies were contracted two months in advance, one had to be cautious in buying the raw materials as by then there could be a correction in the domestic prices. In case of Apollo Tyres, in the last two-three months about 20%-25% of its sheet rubber demand was met by imports owing to the local shortage.
The Kochi Rubber Dealers Federation says production has been low by 4%-5% during April-July this year. “There has been a dip in production due to lack of trained tappers available in Kerala. But as after the rainy season production doubles, we are expecting the situation to improve and also have surplus of 10,000 tonnes on a monthly basis to as high as 30,000 tonnes by November-December,” said N. Radhakrishnan, president of the Rubber Dealers Federation. In an off-season, the production is usually 50,000-55,000 tonnes and in the peak season, it stretches to 70,000-80,000 tonnes monthly.
The association states that availability issue has also been partly due to exports and to some extent due to shortage of labour for processing the raw rubber into sheet rubber which can then be used by tyre companies.
According to the Automotive Tyre Manufacturers Association Director General Rajiv Buddhiraja, “even if the production is good, if the conversion into sheet rubber does not happen, the industry would suffer. In the intervening period before the arrival of peak season, supply concerns remain high.” (Tire Review/Akron)
