Kerala has raised the minimum support price (MSP) of RSS4 rubber to Rs 170 per kg from the earlier Rs 150 per kg. Rajiv Budhraja, Director General of the Automotive Tyre Manufacturers Association, on Wednesday said that the increase in MSP is supporting prices.
"The demand growth has been supportive for the prices. For the Indian situation, coupled with the MSP price increase that has been assured by the Kerala government effective April 1, moving up from Rs 150 to Rs 170 has given a bit of support. As we step into the lean season, overall availability declines. Finally, on the demand side it has been very positive and encouraging and is likely to remain so at least over the next two quarters. So, these four pillars are supporting the domestic prices,” he said in an interview to CNBC-TV18.
He added that there has been a demand and production mismatch.
"On the production side, we have seen marginal single-digit growth, close to about 4 percent. This is for the period July until about January-February which is where the peak season ends. But consumption has seen a much more robust growth at about 12 percent in the corresponding period. So, I think as always the situation remains somewhat worrisome for the domestic tyre industry on the domestic availability side. That is a concern because we had seen good demand coming on the tyre side from the auto sector, the replacement market, as also exports. Just as we enter into the lean season, future availability is a matter of concern on the domestic front,” he said.
Budhraja said that imports, too, is facing challenges in terms of availability and logistics.
“Although the situation there is very challenging, not just from the availability point of view, but more on the logistics. As we know shipping lines and port congestion is already playing havoc with the logistics for the company. So that is a bit of a concern. However, to the extent of the gap, imports will bridge the deficit,” he said.Watch video for more.