Anti-dumping duty on Styrene Butadiene Rubber - tyre and automobile industry may face margin pressure

Impact: Rubber Industry: Positive

               Tyre Industry: Negative

               Automobile Industry: Negative

Indian government has imposed anti-dumping duty on import of 1500 and 1700 series Styrene Butadiene Rubber (SBR) from the European Union, Thailand and South Korea. The anti-dumping duty has been imposed for a period of five years. Rubber imports of SBR category from these regions are nearly 95% of overall imports (of this category) and 61% of overall domestic consumption.

As per the Commerce Ministry analysis, the net landed price during Q1, FY15 to Q2, FY16 (the period of investigation) was Rs. 101,164/MT, undercutting domestic substitute’s price by 20-30%. This dumping of cheaper rubber products of sorts caused the domestic industries to reduce prices aggressively in order to survive in the market. It must be noted that the capacity utilization levels of the domestic firms remained around 38% during Q1, FY15 to Q2, FY16. Therefore, with the imposition of anti-dumping duties, investment in the industry is likely to spur in the coming months. Moreover, the domestic players may alo tweak prices inline with the evolving cost of production. We, therefore, believe that this duty will have a positive impact on the domestic rubber industry. As a negative impact though, an increase in the input cost for the forward linkage industries (as part of the upside supply chain) such as tyre and automobile – is expected.

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