Rubber Imports To Hit Record 2 Lakh Tonne.

Mumbai: India, the world’s second-biggest rubber consumer, is likely to import a record 2,00,000 tonnes of natural rubber in the year ending March 31, 2012 as tyre makers cash in on lower customs duties, the head of a trade body said on Tuesday.

“Considering the lower imports duty and price parity, I think imports of at least 200,000 tonne would be there,” George Valy, president of the Indian Rubber Dealers’ Federation, told Reuters in an interview.

The country had already imported a record 1,77,637 tonne of natural rubber in the financial year which ended in March 2011.

Valy said in 2011-12 consumption is likely to rise by 5.4% to one million tonne and production would be 9,00,000 tonne, up 4.4% on the year.

The federal government has allowed imports with a duty of 20% or R20 a kg, whichever is lower, for the current financial year, effectively cutting the import duty.

Tyre makers this year were importing rubber and paying duty of R20 per kg. They would have been paying duty of over R43 per kg at current prices had the duty been 20%.

The country, the world’s fourth-biggest producer, will need more imports than the implied shortfall of 1,00,000 tonne for 2011-12 as farmers are not selling all their production.

They are holding some stocks in the hope of higher prices in future, Valy said, after prices more than doubled in the last two years.

Farmers are holding a huge amount of stocks. This has never happened before. The holding tendency is unlikely to allow domestic prices to correct sharply. As soon as prices go down, farmers cut supplies, he said.

Imports in the first quarter of the current financial year rose 9.7% on a year ago to 41,929 tonne.

India imports natural rubber from Thailand -- the world’s biggest producer -- Indonesia, Malaysia and Vietnam. The world’s largest importer is China, which is also the top consumer with an intake of 3.5 million tonne.

There were concerns that India’s natural rubber consumption growth could slow in 2011-12 as auto sales are falling, hitting tyre demand from original equipment manufacturers (OEMs).

But Valy said there was demand from the tyre replacement segment which will drive growth.

He added that domestic prices this year were likely to remain near international levels because of the change in duties, after farmers charged premiums of up to R35 per kg last year on international prices, given high import duties.

“Imports are rising. Carry-forwards stocks are ample. So I don't think the difference between domestic and international prices will rise like last year. Local prices will remain near international prices,” Valy said.

At the end of June, stocks stood at 2,47,442 tonne compared with 1,80,697 tonne a year ago, data with the state-run Rubber Board showed.

“The country’s 2011-12 natural rubber production will rise due to good monsoon rainfall in the southern state of Kerala, the country’s biggest producer,” Valy said.

Source : financialexpress.com