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RUBBER STAKEHOLDER NEWS : MRF chief K M Mammen elected Chairman of ATMA
(Last Updated: 26 Mar 2019)

 

 

 

K M Mammen, Chairman & Managing Director, MRF Ltd, has been elected as Chairman of Automotive Tyre Manufacturers’ Association (ATMA), the national industry body for automotive tyre sector in India. Anshuman Singhania, Director of JK Tyre & Industries Ltd, is the new Vice-Chairman of the organisation.
Established in 1975, ATMA is the most powerful body of the Indian tyre manufacturers representing the USD 8.5 billion automotive tyre industry. The members of ATMA comprise as many as 11 tyre companies, both Indian and international tyre majors accounting for over 95 % of production of tyres in India.
ATMA members include Apollo Tyres, Birla Tyres, Bridgestone India, Ceat, Continental India, Goodyear India, JK Tyre & Industries, Michelin, MRF, TVS Tyres and Yokohama.
In the newly reconstituted ATMA Core Group, Rajat Nangia, Senior General Manager (Replacement Sales), MRF Ltd, is the Convener of ATMA Industry, Public & Economic Affairs (IPEA) Group that looks at developing new markets and increasing export competitiveness of Indian tyre industry.
ATMA Supply Chain & Resources (SCR) Group will now be headed by Roopesh R, Vice President – Procurement, Ceat Ltd. V.K. Misra, Technical Director, JK Tyre & Industries Ltd., a veteran of the industry, has taken over the reins of ATMA Technology, Environment, Safety & Standards (TESS) Group.

 

‘Tyre industry’s claims of rubber shortage untrue’

Statement aimed at paving the way for more imports, say growers

Natural rubber growers have disputed the tyre industry’s claims of a rubber shortage, saying that this was meant to “pave the way for further imports of the raw material”.

The industry’s procurement of rubber below market rates has forced small and marginal farmers to hold on to their stock; this emerging situation has made the industry come out with allegations of shortage, which is not at all true, N Radhakrishnan, past president, Cochin Rubber Merchants Association, told BusinessLine.

According to him, the industry always quoted a price 1-3 per kg lower than the published rates of the Rubber Board for domestic rubber. For instance, the RSS IV grade fetches a price of 129/kg while the tyre makers procure it at 128. Similarly, for RSS V grade, the Rubber Board rates are 126/kg, whereas the industry quotes at 123.

“How can small and marginal rubber growers survive the industry’s tactics when the sector is passing through a critical phase due to uneconomical prices?” he asked. Through this move, the tyre industry is creating an impression of rubber shortage in the domestic market, he added.

At present, natural rubber imports are costly, with a 25 per cent import duty compared to the domestically produced crop. The majority of the growers felt that the industry could help the crisis-ridden domestic sector by purchasing raw material at the rates fixed by the Rubber Board.

Rubber growers have objected to the concerns raised by the Automotive Tyre Manufacturers’ Association (ATMA) over the decline in production, which has led to a widening gap between demand and supply.

On the industry’s demand to raise production, Radhakrishnan said availability is still there in select areas where production started in December-January after the floods. But it was low, in the range of around 75,000 tonnes. However, the situation will change with the start of rains by mid April, which would push up production, he said.

It is true that the majority of planters have discontinued rubber tapping due to summer; but small farmers, who carry out self-tapping, are still continuing for want of money, he added.

This being the lean period, production will be low because of the low moisture content in the soil, official sources in the sector said. Normally this is the time when growers give tapping a break due to drought-like conditions; Production will go up once summer showers set in, they added.

 
Published on March 22, 2019

Allow tyre makers to import rubber at same rate as end users: AK Bajoria, JK Tyre

 We are requesting that until and unless the demand gap is filled, we should be allowed to import natural rubber at the same rate as the end users. Finished tyre is getting imported at less than 10% duty, said AK Bajoria, Director, JK Tyres, in an interview with ETNOW.

Edited excerpts:

What is the extent of the production supply gap in ? Also, how much has  risen?

 

Natural  has been continuously dropping from 8.4 lakh tonnes to 6 lakh tonnes in the last 10 years. There has been a fall of more than 30%. Consumption has increased from 8.72 lakh tonnes to 12 lakh tonnes and 2018-2019 is the first year where production has touched almost one lakh metric tonnes per month of consumption. Earlier, the gap was barely 20,000-30,000 tonnes and today the gap is 6 lakh tonnes. The problem has been compounded by the Kerala floods which happened in Q3. This is where we are at this moment on the natural rubber scenario.

Is the present domestic production capable of satisfying the industry needs? Natural rubber consumption in  is set to surpass the projection of 12 lakh tonnes made by the Rubber Board for 2018-2019. Do you see increased dependence on imports compared to what we have seen so far going ahead?

All these figures that I have given are rubber board figures and we are depending on he imports to meet the demand gap. Gradually, this will further increase unless the incentives are given to grow more rubber. Some initiatives have been taken in the North-East states of Tripura and Assam. The quality of rubber coming from that area is not as good as the rubber which is coming from down south. So, help is needed for the tyre industry. Another two-three things that have happened include the export entitlement which helped the tyre industry to import some rubber at a more competitive price.

Now the export obligation period has been reduced from 18 months to six months. So, that much extra exports have to be done to meet the demand. We have used up the import entitlement. Secondly, the pre-import clearance has been made mandatory which was not there. Thirdly, only two ports have been permitted and there are now port restrictions other than the JNPT and the Chennai Port.

We are requesting that until and unless the gap is filled, we should be allowed to import the natural rubber at the same duty as the end users. That means, finished tyre is getting imported at less than 10% duty. The tyre industry’s plea, which is already there with the authorities is we should be allowed to import natural rubber which is in short supply at 10% duty till such time the demand and production gap is narrowed down.

What would higher dependence of imports mean for you in terms of costs? The industry already took a price cut once this year and given the weak OEM demand, you may not be in a position to increase prices?

I would like to look at it differently; There was a demand dip in Q3 in terms of OEMs. There is a lot of liquidity crunch and then there are issues of vehicle insurance and fuel prices. Also, commercial  have to now take more of these clearances. We are talking of a very temporary phase.

Already, OEMs are coming up in March and I am sure that this dip is very temporary and should look up immediately after the elections. In the meantime, JK Tyres has focussed on replacement demand which is always there and then the exports.

What had happened that in the , bus radial where  is the leader in India we had curtailed and restricted exports because we wanted to safeguard our market leadership in India. For this period, it is not an off-and-on game but we have now started pushing many more tyres for exports, particularly the commercial tyres, the truck and bus .

This kind of ups and downs will continue. These are normal cycles. Sometimes they become a little steeper. For example, the OEM cut came rather suddenly but I am not unduly worried as we are doing reasonably well and JK Tyre has grown almost 24% in the corresponding period. We are going to weather this obstacle pretty well.

Automotive  Association (ATMA) has reached out to the government in this regard. Have you heard back from officials? In terms of margins, going forward, what is your anticipation there?

As of now, till the time I am talking to you I am not aware of any response from the government, but I am sure they are looking at it sympathetically because at the end of the day, tyre industry is contributing a great deal to the exchequer.

I am sure they will not let this industry become uncompetitive because otherwise, there are imports taking place despite the anti-dumping that has been imposed on one category that is the truck, bus radial tyres from China.

What is happening is that people are importing from  and  and these are subsidiary manufacturing set-ups of China. This is a bit challenging but the efficient tyre producers and manufacturers in India should be able to overcome these challenges.

The  have asked the government to reduce the import duty for natural  to less than 10 per cent.

Consumption of natural rubber (NR) rose 12 per cent crossing 10.2 lakh tonne in the period between  2018 to January 2019, increasing the demand and domestic supply gap to 45 per cent. Alarmed by the shortage of domestic supply,  manufacturers have asked the government to reduce the import duty for rubber to less than 10 per cent.

Data from Rubber Board shows that production stood at just 5.6 lakh tonne during April 2018 to January 2019, compared to 5.97 lakh tonne in the same period last year.

The production–consumption gap for the same period of previous fiscal stood at 3.16 lakh tonnes, which has increased to 4.63 lakh tonnes in the current financial year. Industry sources said domestic production was impacted due to the floods in Kerala during the first half of the financial year, and the peak season in October to January also failed to deliver the expected production, resulting in a shortage of natural rubber.

“For the first time, the NR consumption in India has crossed the mark of 10 lakh tonnes in the first ten months of a fiscal year recording an average monthly consumption of 1 lakh tonnes. The commitment of the tyre Industry to increase production footprint in the country needs to be supported by increasing the supply of  otherwise  will leave domestic manufacturing uncompetitive”, said Rajiv Budhraja, director general, Automotive Tyre Manufacturers Association ().

NR consumption in India is likely to surpass the projection of 12 lakh tonne made by the Rubber Board for the year 2018-19. With domestic NR production satisfying only 55 percent of the total NR consumption in the country, the dependence on imports for consuming industry has increased by 30 per cent as compared to the previous year.

According to ATMA, natural rubber imports are imperative for tyre plants to run. However the policy environment is highly restrictive. Custom Duty (on NR Imports) is at 25 per cent, much higher than the duty levied by any other natural rubber importing countries.

 

There are port restrictions on imported natural rubber. Only two ports-Chennai and JNPT- are allowed to import natural rubber, which adds to costs and delays. Further, the export obligation period (for tyres) has been reduced from 18 months to only 6 months, which makes it tough for the industry. The tyre industry has urged the government to increasing domestic production of natural rubber and reducing the import duty on it to less than 10 per cent since basic import duty on tyres (finished products) is 10 per cent.

 

 

 

 

 

 

 

 

 

Tonnes of latex are transferred from the warehouse for shipping, but plantation owners and workers are demanding relief from falling rubber prices. (Bangkok Post file photo)

Rubber growers from the South plan to gather in the capital to pressure the military regime into propping up falling prices in all central rubber markets in the South, according to an informed source.

They are mulling a protest at the Agriculture Ministry, the source added.

At a recent meeting, rubber growers agreed the rubber price problem had reached a point where they have to do something.

Prime Minister Prayut Chan-o-cha offered no relief, but said the government remains concerned about the agricultural sector as some crops, particularly rubber, still have falling prices.

“Dropping rubber prices are primarily because of market fundamentals,” he said. “Many buying countries have reduced their purchases of natural rubber while global oil prices are still as low as US$50 per barrel”.

He said the government has been trying to increase domestic consumption for rubber, especially through campaigns calling for private tyre companies to raise their production.

Jatuporn Terachusong, president of the Yungthong rubber plantation fund cooperatives in Lan Saka district of Nakhon Si Thammarat, said rubber growers‘ incomes have slumped by more than half while the cost of living continues to rise.

The bidding prices for rubber in the South‘s three major central rubber markets continued to drop Tuesday, said another source.

The price of unsmoked rubber sheets offered by the winning bidder at the central rubber market in Hat Yai district of Songkhla dropped by 52 satang to 44.38 baht per kilogramme Tuesday.

A similar price for unsmoked rubber sheets was offered by the bid winner at Surat Thani central rubber market, down 63 satang to 44.58 baht per kg.

The price offered by the winning bidder at the Nakhon Si Thammart central rubber market was 63 satang per kg lower.

Wuth Rakthong, a representative of Phuang Phromkhon cooperatives in Surat Thani‘s Khian Sa district, said all rubber growers‘ cooperatives in the province have decided to boycott a workshop scheduled to be held today in Krabi, which is expected to be attended by leaders of about 40 agricultural institutions nationwide.

Mr Wuth criticised the establishment of a fund by five giant companies to purchase rubber at the southern central rubber markets, saying the fund, which is aimed at helping improve rubber prices, is instead causing volatility in its prices.

He also lashed out at the Rubber Authority of Thailand (RAT) and the government, saying the RAT never paid sufficient attention to ensuring price stability for rubber, while the government‘s move to spend more than 2 billion baht to support cooperatives to build rubber processing houses has proved to be a waste of taxpayers‘ money.

In Nakhon Si Thammarat, Nantachat Chaihao, president of a network of rubber growers in Tha Sala district, said while the average cost of growing and producing rubber stands at 62 baht per kg, it now sells for only 45 baht to 46 baht per kg.

On Monday, Sunthon Rakrong, president of an association of rubber growers in the 16 southern provinces and secretary-general of the network of rubber growers of Thailand, posted on his Facebook harsh criticism of the five experts who represent rubber growers nationwide on the RAT‘s board.

Although they occupy one-third of the seats on the RAT‘s board, they have done nothing to help rubber growers especially at a time when prices are falling, Mr Sunthon said.

He said the performance of the five board members over the past two years has dismayed rubber growers across the country.

 

Stakeholders in the global natural rubber supply network have “aligned on a governance structure” for the Global Platform for Sustainable Natural Rubber (GPSNR), the tyre industry-led initiative.
The GPSNR was formed as an independent platform to drive improvements in the socio-economic and environmental performance of the natural rubber value chain.
Over recent months, environmental non-governmental organizations have argued that the level of control held by tyre manufacturers in the GPSNR would undermine its effectiveness. Agreement has now been reached on “a multi-stakeholder governance structure that includes a greater share of voting weight for ‘civil society’ members,” the organization said.
This follows a workshop by founder members and other stakeholders in Singapore on January 22-23, 2019 and another in Geneva last November.
In Singapore, the more than 50 GPSNR stakeholders also agreed that smallholder representatives should be part of the decision-making structure.
They further highlighted the importance of involving rubber processors, NGOs specialized in social aspects relevant to rubber production, and non-tyre rubber product makers.
The proposed governance structure will be put forward for adoption at the platform’s inaugural general assembly, scheduled for March 21, in Singapore alongside the World Rubber Summit.

India has appointed Dr. Ranjit Matthan (R. K. Matthan) as president of the Indian Rubber Manufacturers' Research Association (IRMRA). Dr. Matthan, Director of Polymer Consultancy Services (P) Ltd, is a global authority in polymer technology and international standards for rubber and rubber products. He succeeds Mr. Rajendra V. Gandhi who has completed his term in Dec 2018.

 
 

Tyre firms roll back prices, hope to liquidate inventory

January 8, 2019

CChennai: On the back of softening natural  coupled with lower  prices, tyre companies reduced prices by 2-5% over the past few days, as they hope to liquidate the inventory pile up due to slowdown in new vehicle sales.

While some companies are in wait-and-watch mode, others including  have announced a rollback of their last November price hike. “We have taken two price hikes in 2018 — one in May and the other in November and we have just rolled back our second price increase,” said Satish Sharma, president,  and Africa region, .

The  is expecting a reduction in GST from the current 28% to 18%.

“The next GST council meeting is end of this week and the industry is expecting a slab reduction so the rollbacks and discounts are a means to get rid of existing inventory. Already tyre companies are offering 4-5% discounts but where there are bulk sales to big dealers, the discounts are as high as 20-25%,” said SP Singh of All India Tyre Dealers’ Federation.

 

December is typically a low wholesale month for the passenger vehicle and two wheeler industry and tyre wear and tear is also less in winter. So inventories tend to be high, he added.

Crude prices have come down from $86 to $54 therefore products like synthetic rubber, carbon black etc are all cheaper now.

Natural rubber prices are also down from  135 per kg mid last year to  115-120 per kg right now, said Singh.

“The adverse effects of the increase in crude, interest rates, depreciation of INR and lack of festive demand uptick has been the maximum in the third quarter. There is some comfort that the rupee has not weakened further and crude prices have softened over the last two months. This is a welcome change for the industry. We also expect demand to resume to normal levels in the . A decision to lower price or not is subject to competitive pressures and will be taken on a case to case basis,” said Anant Goenka, managing director, CEAT.

 

 

Tire industry must continue to go green, according to experts

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