* Heavy rainfall trims local output, lifts prices
* Tyre makers raise purchases of cheaper overseas rubber
* Domestic supplies seen tight until October on monsoon
By Rajendra Jadhav
MUMBAI, July 26 India's natural rubber imports
are likely to jump by 50 percent July-September from a year ago
as excess rainfall slashes production and boosts local prices,
said the head of an industry body, forcing tyre makers to take
cheaper overseas supplies.
Higher imports by the fourth biggest natural rubber producer
would likely support global rubber prices, which are under
pressure due to amply supply from top producer Thailand.
"Tyre makers have no choice but to import more. Local
production is not sufficient to meet the demand," said George
Valy, president of the Indian Rubber Dealers' Federation.
Some rubber farmers are also holding onto their stocks
hoping for even higher local prices, exacerbating the shortage.
Imports could rise to 80,000 tonnes of natural rubber in the
July-September quarter, Valy said. India imported 53,522 tonnes
or rubber in the same quarter of 2012.
India's natural rubber production fell 13 percent in June
from a year ago to 54,000 tonnes against demand of 82,000
tonnes, the state-run Rubber Board said earlier this month.
But industry officials like Valy believe the drop in output
was much bigger and that the board will revise its figure.
"Excessive rains since the start of June surprised
everyone," he said. "Farmers couldn't put rain-guards, and since
there are lower rain-guarded trees, there is a drop in tapping."
Rain-guards keep rainwater from running into collection cups
and damaging the collected latex, allowing tapping to continue.
India's southern state of Kerala, which accounts for more
than 90 percent of the country's natural rubber production,
received 40 percent more rainfall than normal since the
beginning of the four-month monsoon season on June 1.
Thin supplies lifted rubber prices in India to 19,450 Indian
rupees ($330) per 100 kg, an increase of nearly 10 percent in
just a month and making imported supplies more attractive.
Thai RSS3 rubber for September was quoted by traders this
week at $2.60 per kg. Malaysia's SMR20 grade was at $2.30 per
The sudden rise in local prices will hurt tyre makers like
JK Tyres, Apollo Tyres, Ceat and
MRF and may force them to raise tyre prices, said an
official at Automotive Tyre Manufacturers Association (ATMA).
Tyre makers are mainly buying Malaysia's SMR20 grade and
have already signed deals for August and September shipments,
said the official.
"The gap between local and overseas prices is rising every
day," said N. Radhakrishnan, a dealer and former president of
the Cochin Rubber Merchants Association.
"Some farmers are not releasing stocks expecting further
rises in prices, which is making the shortfall severe. Tyre
makers have to somehow fulfil their requirement, so they are
importing," Radhakrishnan said.
Supplies are likely to remain tight until October, when the
country enters the peak production season, which lasts until the
start of February, industry officials say.
"Higher production will bring down the difference between
local and overseas prices and ultimately tyre makers will start
cutting imports," Radhakrishnan said.
In April, industry officials were expecting the country's
natural rubber imports in 2013/2014 to fall by a quarter, the
first drop in five years, as demand stagnated due to a slowdown
in the auto industry.
Now they are expecting imports to at least match last year's
record level of 217,364 tonnes.
"Exceptionally high rainfall changed the local supply
scenario," Valy said.
($1 = 59.12 Indian rupees)
(Editing by Tom Hogue)