Carbon Black shortage leading to tyre plants shutdown
19 Feb — The crunch in domestic availability of Carbon Black has reached such an extent that that several domestic tyre companies have been forced to take unplanned shutdowns in the recent past for want of this essential raw-material, Automotive Tyre Manufacturers Association (ATMA) has stated in a representation to Ministry of Commerce & Industry. The industry body has asked for facilitating easy import of the raw material to ride out the difficult phase having an adverse impact on tyre production in the country.
According to ATMA, factors that have led to the domestic deficit in Carbon Black taking a grim turn include a mismatch in capacity addition by domestic Carbon Black Industry in comparison to growing demand from the domestic Tyre Industry and increased exports by domestic Carbon Black manufacturers. Domestic demand supply gap in Carbon Black which was 14% in FY 2016-17 has gone up to 20% in FY 2017-18.
“As it is, domestic Tyre Industry is facing the ongoing concern of shortfall in overall availability of Natural Rubber (NR) on a regular basis. Carbon Black shortage has only added to the woes of Tyre Industry in India”, said Mr. Mohan Kurian, Convener, ATMA Supply Chain & Resources (SCR) Group.
Late last year, ATMA held a Partners Summit especially to engage with carbon black manufacturers and apprise them of the domestic shortage.
Notwithstanding domestic crunch, steep Anti Dumping Duty has been imposed on Carbon Black imports from China, the single largest producer of Carbon Black in the world accounting for approx. 40% of its global production.
“Sustainable ways of improving raw material availability for the tyre industry need to be worked out for continuation of Make in India drive in this vital sector. Domestic Tyre Industry is anticipating good growth in tyre demand after a prolonged period of overall slowdown. It becomes imperative to improve the Carbon Black availability situation urgently”, said Mr. Kurian.
According to ATMA, tyre industry is left with no other choice but to import Carbon Black to meet domestic deficit. However steep anti dumping duty amounting to approximately 40% of the import price is in place in India making such duty paid imports almost prohibitive.
The unplanned cuts in tyre production arising from shortfall in Carbon Black availability would only lead to higher imports of finished tyres from outside India thereby discouraging value addition within the country. Besides, substantial investments made by the Indian Tyre Industry in capacity creation and enhancement, primarily in Truck & Bus radial categories, will suffer due to shortfall of this essential raw material.
ATMA has therefore asked the Government to allow tyre companies to import Carbon Black on a duty free basis to the extent of the existing gap between demand – supply to enable the domestic Tyre industry continue with its planned production. Anti-Dumping Duty (ADD) applicable on Carbon Black imports from China needs to be waived till such time the domestic availability improves. Till such time the CB overall availability position improves. At the same time, export of Carbon Black from India needs to be regulated by way of fixing a minimum (higher) export price and / or quantitative restriction;
As Carbon Black is a critical raw material for manufacture of tyres and the entire transport sector mobility is dependent on tyres, concerted efforts be made by the Govt. on a long term basis to encourage carbon black manufacturing capacity within India as a part of the ‘Make in India’ initiative, ATMA has stated.
According to ATMA, the shutdown of Continental carbon plant at Ghaziabad over the past two months has further reduced the domestic availability of Carbon Black. Steps need to be taken to restart the plant urgently (after ensuring that the plant meets all statutory regulations) so that availability issue of carbon black could be addressed to some extent.