Natural rubber import is likely to be more attractive for the industry as leading producing countries weigh more concessions on export. To add to the woes of the growers, the military junta of Thailand, world's largest exporter of rubber, has recently decided to release 200,000 metric tons of stock pile. Adding much pressure on the supply side this will definitely cause drop in the international prices, leading to more imports to countries like India, experts said. Today in India, the price of bench mark grade RSS-4 is quoted at Rs 127/kg, while the Bangkok price in rupee terms is Rs 107 only. In an effort to boost export, Vietnam Ministry of Finance is considering cutting the rubber export tax to zero from the current rate of 1 percent.

"Last November, Vietnam decreased the export tax for centrifugal rubber and synthetic rubber from 3 percent to 1 percent. Now they mull reducing the tax to the zero level. The price advantage will definitely favor more import to India this year," said Rajiv Budhraja, director general of the Automotive Tyre Manufacturers Association (ATMA). He told Business Standard that it is not the price alone that would determine the quantum of imports, but local availability and quality are major issues. But in this year price is a major attractive factor and overseas availability is also higher. So these factors favor more imports to India, he said. Experts feel that the total import would definitely cross 400,000 metric tons in this financial year. During 2013-14, India imported 325,190 metric tons as against 217,364 metric tons in 2012-13. It is interesting to note that import will be roughly 50 percent of India's total production if it crosses 400,000 metric tons. During the first five months of this year, Vietnam exported 239,000 metric tons of rubber, worth $472 million. Compared to the same period of last year, export volume has shrunk 20.5 percent, while revenue was 39.3 percent lower. The total revenue for 2014 is expected to be 25 percent to 30 percent lower than in 2013.

In addition, the volume of rubber that Vietnam has been exporting to its main export partners, China, Malaysia and India, has been decreasing tremendously every year. For example, China imported 37.7 percent less than last year, which resulted in a 53.4 percent reduction in revenue. This is the reason for that country to opt for zero export excess. According to the latest data of the Rubber Board, in the April-July period, 133,789 metric tons of NR were brought into the country. This is for the first time that rubber import crosses 100,000 metric tons in just four months time. The price advantage in the global market, coupled with fresh initiatives of major producing countries to export their produce, will make the tire companies more advantageous.

Source: Business Standard