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RUBBER STAKEHOLDER NEWS : Tyre-makers seek easier import norms
(Last Updated: 06 Dec 2017)




Hit by dropping rubber production, tyre-makers seek easier import norms


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The tyre industry has raised its concern over the deficit in natural rubber, saying “the gap between production and consumption is not showing any signs of bridging”.


Expressing concern over the fresh production data released by Rubber Board for the first half of the current fiscal, Satish Sharma, Chairman, Automotive Tyre Manufacturers Association (ATMA), said the deficit last year was 40 per cent. The gap in the first half of this fiscal remains at the same level.


The industry consumes 65-70 per cent of the country’s rubber output. For 2017-18, the Rubber Board had projected the production at 8 lakh tonnes (lt), up 16 per cent over previous year’s 6.9 lt. However, in the first half of 2017-18, the production was only 3.2 lt, growing 5 per cent over the previous period.


To achieve the target of 8 lakh tonnes, production needs to grow at 24 per cent in the second half over the year- ago period which, according to ATMA, looks unlikely.





The tyre industry is facing acute rubber scarcity even in the ongoing peak season. It has also been paying more for the domestic rubber than for imports. The tyre industry faces a serious threat of disruption, Sharma added. According to ATMA, rubber imports attract 25 per cent duty, which is the highest in the world, and adds to the cost. Yet, there is no option but to import.


The industry asked for imports on a tariff rate quota (TRQ) basis at ‘nil’ duty to the extent of the gap between domestic production and consumption. It also asked for removal of the restriction of imports only via Chennai and JNPT; this adds to the cost and delays.


ATMA called for a correction in the ‘inverted duty structure’ as effective customs duty on tyres ranges between 0 and 8.6 per cent vis-à-vis the basic duty in India at 25 per cent.

(This article was published on December 5, 2017)


Kerala’s rubber growers feel the pinch of GST


Amid falling prices, the ailing  sector seems to have hit a rough patch again. First, it was the currency crunch following demonetisation. Now, this major commercial crop, is facing the heat due to the confusion prevailing over Goods and Services Tax (GST).

Kerala’s rubber growers feel the pinch of GST

Stretched GST has struck the rubber sector hard, creating confusion and lack of clarity

The  sector has been in the grip of a crisis for the last four years, with the prices of this strategic raw material coming down below the cost of production. This has not only led to a drop in production, but also caused hardships for millions of small growers.


Non- segment

While rubber prices were at their lowest the sector was hit by demonetisation and GST, according to N Dharmaraj, former Upasi president. The impact of demonetisation was felt across the industry, but it was more pronounced in the non-tyre segment.

Though demonetisation and subsequent cash shortage diminished the demand for quite some time, the GST struck the sector hard, creating confusion and lack of clarity on many aspects. According to him, there were cumbersome procedures as well as infrastructural requirements in terms of Income Tax support and skilled manpower. This has increased the cost of compliance for small business in the short-term.

The rubber economy at the grassroot level of small users and manufacturers is undoubtedly a currency economy, and an overnight transition to the digital economy was extremely difficult. Thus, the main issues faced by the industry pertained to a transition to the new tax regime by small and very small dealers and manufacturers, he added.


P C Cyriac, President, Indian Farmers Movement (Infam), pointed out the authorities had even turned down the growers’ request to impose a safeguard duty to discourage imports during crisis. Several agricultural activities, timely farming and payment of wages have been affected, but the situation is now coming back to normal. However, the GST struck the sector with a new compliance regime, something the sector was not equipped to face.

The insistence of GST registration has put Rubber Producer Societies (RPS) on tender hooks as they are working on voluntary basis. RPS are self-help groups at the village level, assisting growers with technology transfer and common marketing at remunerative prices. All these RPS have been in existence for the last 30 years and were working on a no-profit no-loss basis. They will be forced to close down if the IT department goes ahead with its order, added Cyriac.

George Valy, President of the  Rubber Dealers Federation, said the need of the hour is to ensure a price stability at ₹150/kg so as to make rubber cultivation viable to small and marginal farmers. “A majority of the farmers may return to tapping if they realise a decent income, and that will ensure a revival of the sector,” he said. Today prices are hovering at ₹125/kg vis-a-vis ₹105/kg international prices, forcing  to depend on imports.

There are some input materials which have gone into a bracket of higher taxation, adversely affecting growers and increasing the cost of production. This includes shells for tapping, fungicides, sheet rollers and other processing equipment. This has affected the sale of agricultural implements, which have witnessed a drop of 20-30 per cent, according to Rubber Board officials.


Myanmar rubber exports set to rise even as global prices take a beating


The price of rubber has fallen below its cost of production in major exporting countries. Yet, international demand for rubber produced in Myanmar has risen and insiders reckon things could remain upbeat for a while more.

“Myanmar rubber production will certainly increase on the back of rising international consumption and demand,” U Myo Thant, vice-chair at the Myanmar Rubber Planters and Producers Association (MRPPA), told The Myanmar Times.

The emerging trend represents a rare opportunity for Myanmar rubber producers to secure a foothold in the global market after lagging for years behind the world’s three major rubber producing countries: neighbouring  as well as Malaysia and Indonesia.

Cyclical trade


The  trade is an inherently cyclical one. Rubber tree saplings take 7-10 years to mature before the barks are removed to harvest natural rubber, a sticky, cream-like sap which is used to produce tyres and other goods.

The rubber produced is then processed and graded for quality.  rubber, for instance, is used as a component in tyre-making, while RSS5 is of cheaper and lower-grade quality. According to U Myo Thant, major rubber producers will soon be unable to supply sufficient quantities of rubber to tyre factories in China and other importing countries because rubber saplings have not reached the right age for harvesting.

Meanwhile, the International Tripartite Rubber Council (ITRC) comprising Thailand, Malaysia and Indonesia announced this month that  expects the ‘La Nina’ weather phenomenon to bring heavy rains to the region in the coming months which will affect production and supply of natural rubber to global markets.

The ITRC also concluded that current prices of rubber were “not reflective of market fundamentals.” Prices of Thai natural rubber have fallen from a peak of 179.25 baht ($5.41) per kg in 2011 to 47.75 baht on November 10, according to Reuters.

This is where Myanmar can step up to fill the gap and establish itself as a serious rubber exporter, U Myo Thant said. Currently, there are some 1.6 million acres of rubber plantation land in Myanmar, with 7 million trees now at the right age for harvesting natural rubber. Most of the country’s  are grown in Mon State as well as in the Taninthayi and Bago regions.

Quality issues

Demand already appears to be rising, with more than 700 tonnes exported to China and Thailand via Myanmar’s order gates in the second week of October compared to 460 tonnes in the first week of that month, according to government data. In September, Myanmar exported a total of 1,077 tonnes of rubber.

Around 80 percent of the rubber produced is exported to China with the remaining sold to Thailand, Malaysia and  as well as local factories.

Yet, rubber prices in Myanmar lag behind global spot prices when rising, but fall just as fast,” said U Mehn Htein Win, coordinator for the Mon State Development Advisory Group. For example, Myanmar rubber prices are currently K835-K840 per pound, while the Thai equivalent is K873 per pound.

This is due to inconsistent grades of rubber produced by local plantations. “Around 85pc of Myanmar rubber plantations is run by small-scale rubber farmers which causes the product form and quality to differ from each other. Myanmar rubber production is not standardised. We can’t guarantee consistency across one product form,” he said.

U Tun Htay , Mon State Minister for Agriculture, Livestock, Transportation and Communications told local media that 90pc of Myanmar rubber is low-quality, resulting in industry losses of K400 million a year. Because of the lack of quality and demand for Myanmar-produced rubber, producers are at a disadvantage and forced into becoming price takers of sell their products.

The other reason for poor quality is the lack of skilled manpower. “Our region is near Thailand, so most of our skilled workers go to Thailand to earn money,” U Aung Myo, chair of Dawei District Rubber Growers Association, told The Myanmar Times.

Myanmar rubber exports set to rise even as global prices take a beating

Workers lay out processed sheets of rubber for drying. Rubber is used mainly for producing tyres. The Myanmar Times

Chinese demand

The other problem is illegal exports. “Actually, 50pc of the exports to China are illegal. China buys every form of rubber type, including the cheap Khot Tone, Khot Hmout , Ahtu Pya rubber. They state the price they want for the low-grade rubber and transport the rubber to their factories for tyre production and value-add,” said U Mehn Htein Win.

He added that seven of the nine foreign robber factories in Mudon, Mon State, are also Chinese rubber factories.

But things could change for the better from now on. Besides China, Japan has also expressed interest in buying Myanmar rubber by cooperating with the MRPPA. The government is also supporting rubber as a national strategic crop, said U Win Thu, director from Myanmar Trade Promotion from the Ministry of Commerce. It is now also building a rubber laboratory in Yangon to raise the quality of local rubber.

Meanwhile, a K2 billion factory producing high-quality rubber near Thabya Village in Dawei township in Thaninthayi region is expected to begin operations in December. Plans to build two more factories are underway, The Myanmar Times understands.

Next year, Norway’s Nyor Company, together with Thai Southland Company and the Karen State Rubber Production Association, also intend to build a rubber refinery in Hpa-An Industrial Zone. Foreign participation in the project is expected to raise the quality of and add value to locally-produced rubber. This will raise international demand and reduce illegal exports.

On the whole, most producers are also expecting the rubber market to develop further and become more open.

  • The Myanmar Times


China: Tire Export Slows Down, Natural Rubber Demand Is Weak

Tire Export Slows Down, NR Demand Is Weak China’s tire export volume in September drops and the accumulative export volume in the first nine months only increases slightly from last year, showing a stable but feeble tire export performance in 2017. China’s tire export is mainly relied on the mode of processing with imported feedstock. What kind of influence will the NR import suffer from the slowing down tire export? In September, the total export volume of all-steel tire and semi-steel tire is 420.10kt, down 16.42% MO-M and up 0.07% Y-O-Y. The accumulative tire export volume in the first nine months is 3,929.90kt, up 0.76% Y-O-Y. The export data in the first three quarters show that China’s tire export remains flat from last year. The export performance does not improve greatly. Meanwhile, the import volume of standard rubber in September is 144,70kt, up 7.02% M-O-M and down 2.22% Y-O-Y. The accumulative import volume of standard rubber is 1,488kt, up 17.57% Y-O-Y. Being different from the tire export, the import growth of standard rubber increases notably. China’s tire enterprises mainly produce tires with imported rubber feedstock and then export the tire products, as NR, the main rubber feedstock, is largely relied on import. Tire enterprises can also gain preferential tax policies. The chart below can show some references for the relations between NR import and tire export. Although NR import volume increases greatly, the resources mainly add the inventories at the Bonded Zone, which does not go to the downstream tire producers totally. That is influenced by the feeble tire export. Compared with the tire export performance in 2016, the tire export remains flat in the first three quarters of 2017. Foreign tire traders may stock up in end 2017. SCI predicts that the tire export may increase in Q4. Based on the above analysis, SCI believes that the flat tire export contributes insufficiently to the demand increase of NR and other rubber feedstock. Besides, although tire export may increase in end 2017, the growth may be limited. However, the analysis of NR import is mainly based on the tire export. A large proportion of imported NR goes into the market circulation. There is a lag between the NR import growth and the downstream demand growth. With no favorable bullish factors, the demand for NR will still be insufficient. The NR market may face oversupply in the future.




Rains may limit drop in NR prices in India

 Persistent rains in Kerala, the largest natural rubber producing state in the country, may limit the drop in domestic prices which have been tracking the downward trend in the global market.

The  prices have fallen 5 % during the month to  127 per kg in Indian market. Normally the prices show a tendency to drop during this time since it is the peak season. ” As a result of continuous rains, however, the  has not resumed fully and the arrivals have shrunk.

The current drop is mostly due to a price decline in the international market,” said Vikas Agarwal, secretary of Cochin Rubber Merchants Association.

The  sheet price was nearly Rs 24 lower at Rs 103.49 per kg on Tuesday. The block rubber which is usually imported by the Indian tyre industry is further down at Rs 89 per kg, which could prompt more imports.


The tenth edition of the annual rubber conference of Association of Natural Rubber Producing Countries () held in Vietnam last week deliberated on the current market trends and came to the conclusion that rubber is following the general trend in entire commodities and the decline is not connected to demand-supply fundamentals as the surplus for 2017 at 50,000 tonnes is too insignificant to make an impact in the world market.

The low prices are compelling people to sell latex instead of rubber sheets. ” For making sheets they have to incur more costs. So it is viable for the small farmers to sell rubber as latex which fetches around Rs 106 per kg,” said P M Thomas, a rubber grower based at .

The growers are waiting for the implementation of the third phase of the price support scheme of the Kerala government, which assures them a price of Rs 150 per kg by paying them the difference between the market price and the support price.

Around 7000 new growers have registered in the scheme taking the total to 4.44 lakh. ” We have started receiving the bills for sale of rubber in July and August which will be cleared by November 30,” said an executive at Rubber Board. Till now an amount of Rs 790 crore has been disbursed under the scheme in the two phases to the growers.

“Once the rain abates, the rubber arrivals may increase which will pull down the prices. A rate of Rs 115 to 120 per kg is possible then,” Thomas said.

  • India Times


Why Kerala is losing its grip on rubber


Why Kerala is losing its grip on rubber

State faces stiff competition from other nations and also within India

The Association of Planters of Kerala () has raised concerns over the State’s declining share in national  during the last decade.

APK, in its annual report, pointed out that the production of  in the State in FY17 was 4.55 lakh tonnes (lt) against 4.38 lt in FY16, witnessing only a slight increase of 3.87 per cent.

Kerala’s share has now come down to 69.66 per cent of the national production from around 92 per cent a decade ago.

One of the reasons attributed by the planters’ body was the increase in area under cultivation in non-traditional regions such as North Eastern parts and Sindhudurg in Maharashtra and the hilly regions of Gujara.

Climate change has also played a major role in the reduction of total production over the last five years. Despite a regular increase in the area under cultivation, the report said that Kerala’s share has been dwindling over the last decade.

This is an indication that there will be stiff competition for  growers in Kerala not only from other -growing countries but also from within the country.

Yield takes a hit

It is pointed out that the yield per hectare in the State was showing a constant downward trend over the last five years due to the fall in prices.

Though the price of the RSS-4 grade improved from the previous years  of ₹113/kg to around ₹135, it is nowhere near the break-even  for the grower.

The increase in total production this year was partly due to a moderate increase in prices, coupled with the price stabilisation scheme announced by the Central government.

However, output is far below the potential, and a considerable area remains untapped.

N Dharmaraj, former Upasi president, said that the production is only about 60 per cent of the installed capacity of Kerala’s natural rubber production.

Interference by the government with normal agricultural operations, vital to maintain productivity in rubber plantations, is also causing loss of production and consequent loss of employment.

The report also said that many growers have stopped tapping and if the situation continues, they may stop cultivating rubber and move on to other crops. According to Dharmaraj, the rubber economy is crucially linked to Kerala’s economy, and sustaining profitability in this sector within the framework of national production and international trade should be a key priority for the the government.

Other factors

APK said that imports by the  industry even during the peak production months, along with the increase in wages and cost of production, have made rubber lose its attraction.

Added to this, the scarcity of tappers and high level of absenteeism, diversion of farmland to other non-farm activities, and the depleting size of holdings are other factors behind the decline in production.





Kerala’s plantation sector losing ground on rising imports, taxes



Import, high taxes hit growers of cash crops

Kerala’s plantation sector has been severely hit due to the unrestricted import of cash crops – the total value of production in the State has declined from ₹21,000 crore in 2012-13 to ₹ 9,751 crore in 2016-17.

According to the Association of Planters of Kerala (APK), import of plantation commodities, coupled with the inability of planters to move up in the value chain, have made the sector a low-end commodity producer.

Thomas Jacob, Chairman, APK, cited issues related to climate change, high taxation and high input and manpower cost as the reasons for the surge in production cost and low productivity of land.

Cash crops affected

The huge imbalance between cost of production and price realisation in the industry has led to losses in tea, coffee, cardamom and rubber production.

Land-related issues, according to C Vinayaraghavan, former president of APK, have impacted re-planting in tea estates and production has come down to 1,200 kg/hectare. However, product