RUBBER PRICES CONTINUE TO SOAR, THREATEN TO HIT TYRE MKT

The market expects it to climb by another 10% in a couple of months if supply does not improve. With the rubber sector in India entering a lean season Seta delays in import due to the Red Sea crisis, a spurt in supply looks unlikely

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Higher natural rubber (NR) prices triggered by surging demand, shrinking supply and import delays will hit the automobile and other rubber user sectors if the situation persists for some more time, according to industry spokespersons.

Indian NR prices rose 6 per cent in the past one month. At the same time the international prices escalated 15 per cent due to a slump in major rubber producing countries.

Indian rubber variety RSS4, used more by the consuming industry, was selling at Rs 164 per kg last week. The market expects it to climb by another 10 percent in a couple of months if supply does not improve. With the rubber sector in India entering a lean season and delays in import due to the Red Sea crisis, a spurt in supply looks unlikely.

“The Red Sea crisis has affected the import of rubber, both synthetic and natural, and chemicals. The freight rates too have zoomed. Besides, there is a shortage of containers for tyre exports. If the situation continues for a few more weeks, then the current inventory will get depleted,” said Rajiv Budhraja, Director General of the Automotive Tyre Manufacturers’ Association (ATMA).

Apart from its purchases from the local market, India has been importing over 5 lakh tonnes NR annually in the last couple of years to meet its requirement.

Tyre demand is quite healthy in most segments, Budhraja said. “Typically, the increased mobility during elections shores up the demand further. But the uncertainty in supply could play a spoilsport”.