Indian tyremakers have stopped signing new natural rubber import deals as they are getting the raw material more than 15% cheaper in the local market, two dealers and one trade official told Reuters.
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India, the world’s fourth-biggest rubber producer, imports mainly from Thailand, Malaysia and Indonesia.
“They (tyre-makers) are aggressively buying in the domestic market due to cheaper supplies,” said a dealer based in Kochi in southern state of Kerala, the biggest producing state in the country.
On Friday, spot price of the most traded RSS-4 rubber (ribbed smoked sheet) was INR197 (US$4.36) per kg versus INR203 (US$4.50 in Bangkok.
In the past one month, spot rubber price in India has risen by 1%, while that in the international market rose by 9%.
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By GlobalData“Rubber is at least 15% cheaper in Indian market if you add import duty and freight charges, and calculate landed cost of imported rubber,” George Valy, president of The Indian Rubber Dealers Federation, told Reuters.
India charges 20% import duty on natural rubber.
In August, Indian rubber makers were charging a premium of as much as INR35 per kg over the Bangkok market, prompting Indian tyre companies to sign import deals aggressively for shipment in September to December.
“Now the scenario is exactly the opposite. No one is signing import deals. Still we are getting rubber from old contracts. That will continue for next one month, but if the scenario remains the same, imports will be very low in January to March period,” said another dealer based in Kerala.
The country has imported to 143,468 tonnes of natural rubber in April-Nov, up 3% on year due to lower than anticipated local production.
India is likely to produce around 850,000 tonnes of natural rubber in 2010/11, down 4.8% from the earlier estimate, after heavy unseasonal rains affected tapping, a senior rubber board official said on Thursday.
India’s Automotive Tyre Manufacturers’ Association has estimated India’s 2010/11 tyre production to rise to a record 121.4m units as companies boost capacity to meet booming demand from the local auto industry.
