Escalating prices of natural rubber has increased the demand for synthetic rubber  Soaring prices of natural rubber (NR) has increased the demand for synthetic rubber (SR) in the country. Rubber is mainly used to manufacture tyres, tubes, medical gloves, carpets, adhesives and toy balloons, among others. However, as the production of NR is unable to cater to the industry requirements that utilise rubber, SR is being used as an alternative. With demand rising for SR, the price of this variety is also likely to surge. As a result, prices of products made from SR would also rise, thereby taking a beating on profit margins of industries dependent on the commodity.
Reasons for hike in rubber prices
“The prices of rubber have been skyrocketing due to short supply of rubber tree seedlings, which are capable of increasing rubber production, thereby stabilising the prices of the commodity. Further adding to the rubber industry’s woes is the increase in farmers’ input costs,” says Siddesh Chauhan, director of Jayshree Pvt Limited, a small-sized rubber products supplier and exporter in Pune.
In an exclusive interview with a Retailing360 correspondent, Rajiv Budhraja, director general of the Automotive Tyre Manufacturers’ Association in New Delhi, says, “Demand is outstripping the supply of rubber in the domestic market. Future trading should be temporarily suspended in order to curtail the rising prices of NR in India.”
GoI’s role in curtailing high rubber prices
Mr Budhraja further said that the Government of India (GoI) should ensure that there is easy availability of the commodity at reasonable prices for consumers as well as rubber producing units, which are becoming uncompetitive in the global market due to surging product prices. GoI should undertake similar initiatives that have been taken in China. A benchmark should be created by GoI to reduce rubber prices. This can be done by fixing a specific duty rate, which would prevent the industries from paying high duty.
If GoI plays an active role, then prices of rubber would plummet, which would come as a sigh of relief for rubber producers as well as other industries that utilise rubber as a key input for their products.
Sabrina Mitchell |
