Unfavourable Balance of Trade for Rubber Industry

June 9, 2016

While reversal of the downward trend in crude oil prices is being expected the expanding margins tapped by the rubber and rubber dependent industries could shrink.

After plunging to $27.88 per barrel in January this year, Brent crude oil prices rose to $ 52.75 per barrel on June 8. “…we now expect less downside to oil over 3 months, given supply disruptions, and upgrade commodities to Neutral,” said a 17 May report by Goldman Sachs.

The benefits of soft oil prices being tapped by manufacturers of rubber articles, particularly tyre manufacturers, are projected to cease. Tyres, which constitute a major share of Indian exports of rubber and rubber articles, use derivatives of crude oil like synthetic rubber, carbon black, nylon chord significantly. A rise in cost of raw material for the industry might adversely impact Indian exports of rubber and rubber articles.

The worse for the balance of trade with respect to rubber products is still not over. Hit by the scorching weather, production of natural rubber in country stands hampered despite early monsoon arrival. In this scenario rubber imports from Thailand into India are forecasted to surge.