Tyre industry may face shortage of natural rubber
Created 03/09/2010, 10:34:00 am
Reports that Tata Motors has scaled down production of commercial vehicles by 5-10 per cent in January has sent tremors down the commercial vehicle industry in the country.
One of the main reasons stated is the shortage of key components such as bus/truck radial tyres. This scaling down of vehicle output was despite bus/truck tyre production in India growing by 39 per cent in December 2009 over last year. Bus/truck tyre output for the first nine months of the fiscal was up 11 per cent. Going by the accelerated pace of economic activity, the demand for heavy vehicles and thereby bus/truck tyres is poised to grow in the coming months.
Gearing up to meet the burgeoning demand, the industry announced a flurry of projects with investments totalling Rs 18,411 crore to be executed in the next couple of years. Most of these projects are to address the current shortages in the bus/tyre radial segment. Bus/truck radial tyre projects have been announced by industry majors such as Apollo Tyres, Birla, Bridgestone, JK Tyres, MRF, Dunlop and Michelin. Once these projects are executed, the industry should be in a position to meet the short to medium-term demands of the commercial vehicle sector.
Source of rubber
But the bigger question is where will the tyre industry source natural rubber from? With rubber demand poised to overtake supply in the short to medium-term, the tyre industry does not see very encouraging times in the immediate future, Mr Rajiv Buddhraja, Director-General of the Automotive Tyre Manufacturers Association of India (ATMA), said. Data provided by ATMA reveal that the existing installed capacity to manufacture 11 lakh bus/truck radial tyres would more than double to 26.2 lakh in 2010-11. Then it is poised to more than double to 62.4 lakh in 2011-12.
Fluctuations in output
Meanwhile, statistics available from the Association of Natural Rubber Producing Countries reveal that there have been severe fluctuations in Indian rubber production in recent years. After producing 8.53 lakh tonnes of natural rubber in 2006, there were several fluctuations with production in 2009 projected to dip to 8.17 lakh tonnes. The projection for 2010 is production could rise to 2006 levels, at 8.53 lakh tonnes.
In 2006, India was rubber surplus country with demand pegged at 8.15 lakh tonnes. With consumption in 2009 estimated at 9.04 lakh tonnes, India would become a rubber deficit country. The consumption for 2010 is projected to be 9.82 lakh tonnes. While there is little doubt that the consumption figures would be met, question marks linger on the production possibilities. However, the future holds some promise for the natural rubber sector.
New area coverage
There has been some growth in new areas coming under rubber plantations. From 14,800 hectares in 2005, the area under new rubber saplings shot up to 27,500 hectares in 2008. Despite the lag effect of seven years for rubber trees to yield, this augurs well for the industry. Question marks also remain over large areas with old and low yielding trees.
The pace of re-planting has been dismal: most often at less than 10,000 hectares a year. This compares very poorly with countries such as Indonesia which replanted 55,000 hectares last year and Thailand with 64,000 hectares.
On a comparative basis, other rubber growing countries are racing far ahead of India in bringing new area under rubber plantation. Thailand added 2.21 lakh hectares under rubber trees in 2008, Vietnam 75,000 hectares and China 49,000 hectares against 27,000 hectares by India.
India has a tough task ahead to bridge the gap between demand and supply of rubber in the coming years.
