Click to translate

Click here to read the
August issue.

Product Spotlight

VMI launches a new TBM - the VMI MAXX Click here for more information

Rubber Crisis Looms, May Hit India Hard

5/3/2010 - Kochi, India - An article in The Hindu Business Line by C.J. Punnathara states: "Even as the Association of Natural Rubber Producing Countries (ANRPC) has warned of an imminent rubber crisis gripping the world economy, India seems least prepared to confront such an eventuality. The Indian rubber crisis is twin fold; increasing areas coming under old trees with low productivity which have outlived their economic life cycle and sluggish growth in new areas coming under rubber cultivation. India was just about self-sufficient in rubber production until recently. As Asian economies have transcended to an accelerated pace of economic development, the global demand for automobiles and consequently for tires and rubber have soared. Neither the global nor the domestic natural rubber production has been able to keep pace with the accelerated demand, sources in the rubber trade pointed out. The new area brought under rubber cultivation in India in 2003 was just 7,000 hectares. This is just one percent of the 6.95 lakh hectares under rubber plantations. This meager one percent area would come under tapping from this year onwards as the trees would have attained maturity after seven years. Among the other major rubber producing countries, China planted 36,300 hectares under new trees, Thailand 32,000 hectares and Vietnam 12,000 hectares. By 2008, the new area under rubber plantation in India had grown four-fold to 27,000 hectares. But growth in area in countries such as Thailand was far more spectacular at 2.21 lakh hectares, Vietnam 75,000 and China 49,100 hectares. As global demand continues to outstrip supply and a rubber crisis seems imminent, other producing countries seem better prepared to confront such a crisis. Even in the realm of replanting old and economically unviable trees, India seems to have fallen short of other major producing countries. While India was replanting 7,400 hectares in 2003, Thailand was replanting 52,000 hectares and Malaysia 19,100 hectares. Most of the plantations in China being relatively new, it had hardly any area which needed re-planting. While replanting in India had nudged to 9,000 hectares in 2008, it was 40,000 in Indonesia, 32,000 in Thailand and 20,700 hectares in Malaysia. Going by the track record of India and other major rubber producing countries in bringing more areas under rubber cultivation, as well as in replanting old trees with new and more productive seedlings, India seems to have fallen behind. Even as output has been slipping behind other major producing countries, India has evinced an accelerated growth in demand and consumption of rubber. In fact, major rubber consuming countries such as China, India and Malaysia together account for 45 percent of the global rubber consumption. China accounted for 28 percent growth in rubber consumption, followed by India and Malaysia with 13 percent. Imports into India grew by 121 percent during the first quarter this year. As the global mismatch between rubber demand and supply is poised to aggravate this year, prices are poised to remain at high levels. Major producing countries such as Thailand, Indonesia and Vietnam stand to gain from firm price trends. Countries such as India, which are major consumers, are likely to pay the price. High global prices are likely to prove a deterrent, as India is likely to become a net importer of rubber this year."

The Hindu Business Line
www.businessline.in

Market Report