Thailand's Tyre Companies Demand Duty-free Import of 1 Lakh Tonne Rubber

Tyre manufacturers have sought duty-free import of 1 lakh tonne natural rubber as high price and weak rupee did not allow them to complete their special import quota of 40,000 tonne. Tyre companies say recent floods in Thailand and active buying by China may lead to another flareup in the global rubber prices.

The import of 40,000 tonne had been allowed by the government this fiscal year at a reduced duty of 7.5% against the normal 20% duty. Of this quota, the industry has imported around 25,000 tonne. "Higher international prices and the depreciation of rupee have prevented the industry from completing the full lot of imports,'' said Rajiv Budhraja, director general of Automotive Tyre Manufacturers' Association. Now, with a falling rupee, the association is requesting the government to allow duty-free import of 1 lakh tonne.

The association has expressed its reservation on the rubber stock figures provided by the Rubber Board and says it should be reviewed. The board is expected to come out with a revised estimate by the end of November. The board estimate for the stock at the end of September 2011 is 2,79,477 tonne, which some traders feel is a tad high.

International rubber prices dropped to Rs 195.72 per kg last Friday, a fall of Rs 6 from the previous day. Though there is no trading in Bangkok on Monday, Tokyo and Shanghai futures have moved up on positive reports on a resolution to Europe's debt worries. Floods in Thailand, the biggest rubber producer, have not affected rubber plantations but some car factories in the country have stopped production, which could affect the demand.

Though local production has gone up over the last one month, growers are reluctant to sell in anticipation of a better price. "There were continuous tapping during the last one month but not much selling. Demand has not rebounded as the original equipment market still down while the replacement tyre segment has not been able to compensate for this,'' said George Valy, president of Rubber Dealers Association.