Chinese tyre threat stays despite duty hike

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Chinese tyre threat stays despite duty hike

Goverment Panel has recommended hiking anti dumping duty per truck tyre to USD 135. Goverment currently levies anti-dumping duty of USD 99 per truck tyre.

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A goverment panel has recommended hike in anti dumping duty per truck tyre to USD 135. The goverment currently levies anti-dumping duty of USD 99 per truck tyre. Anti-dumping Duty hike is mooted to curb Chinese tyre imports. The government had imposed the provisional anti-dumping duty on import of tyres on October 1.

Philip Eapen, Executive Director - Marketing at MRF said that the anti-dumping duty hike will not make any material difference to the company. The gap between Chinese and Indian tyre prices is in the 25-35% range. He said market prices will likely remain unchanged.

Earlier, Chinese authorities had withdrawn the 5% export subsidy on the tyres and increased freight charges by 20% for exports to India which will have a negative impact on the imported Chinese tyres as the landed costs increases by 15-17%.

Import of radials for commercial vehicles from China reached an all-time high in the first quarter this fiscal and it looks like it is just the tip of the iceberg. According to reports, as per industry estimates, from a nominal 11,000 tyres per month in 2004, tyre imports have shot up to 68,000 per month in the first quarter this year, raising its share from 1.2 per cent to over 8 per cent.

According to Eapen, ""The Chinese threat is still looming large, because if a customer sees this whopping difference of 25-30% between Indian price and the Chinese price, he forgets whether the quality is good, he just goes for it, because it's 30% cheaper."

He further added, "There would be some breaching of the gap but probably that will only affect the middlemen's margins- the wholesalers and retailers."

The other good news for tyre manufacturers is rubber prices have seen a steep fall inline with international prices. Natural rubber averaged Rs 85.7 per kg levels in the June 2007 quarter compared with an average Rs 98 a year earlier. Rubber prices increased from Rs 78 per kg to Rs 116 per kg triggering hikes prices but have seen a fall since then.

-Rahul Kundnani