Tyres turn costlier on skyrocketing rubber price

The price of locally produced rubber has surged, leading to a sharp increase in tyre prices and adding financial strain on consumers, industry insiders say.

Yesterday, rubber was selling for as much as Tk326 per kilogram, up from Tk160-170 just three months ago. The recent fire at Gazi Tyres, the country's largest tyre producer, has disrupted the market, but manufacturers say they are unable to ramp up production due to soaring rubber prices.

Tyre manufacturers are accusing the state-owned Bangladesh Forest Industries Development Corporation (BFIDC) of continuing to export rubber, leaving local tyre makers struggling to source the raw material.

BFIDC officials, however, say the corporation only exports rubber if there is no demand from local parties and its recent shipment was booked several months ago.

Bangladesh Tyre-Tube Manufacturers and Exporters Association President and Rupsha Tyres and Chemicals Ltd Managing Director Shafiqur Rahman Told TBS, "Two months ago, the price of raw rubber, a key material for tyre production, was Tk160-170 per kilogram, but it has now risen to Tk326, alongside increases in the dollar exchange rate and bank loan interest rates, resulting in higher tyre production costs."

Following a storm in Vietnam and Thailand, two major exporters of natural rubber, there has been continuous rainfall, which has increased the price of rubber in the international market, Shafiqur said. 

As the BFIDC follows the international price, it also raised the price yesterday to Tk326 per kg, up from Tk295, he said.

Shafiqur said, "BFIDC has exported rubber to India, but now our entrepreneurs are unable to obtain rubber and have to import it. India produces 6 lakh tonnes of rubber but does not export it, and it also provides opportunities for traders by not imposing duties on the import of raw rubber."

He said the country produces 10,000 tonnes of rubber annually, while the domestic demand is around 12,000-13,000 tonnes. The government should focus on producing quality rubber for local entrepreneurs, he said. 

Tyre prices rise by 15-20%

Retailers say the prices of all types of tyres at the retail level have increased by 15% to 20% over the past month and a half. On 25 August, vandals burned down the Gazi Tyres factory, which produced tyres for rickshaws, rickshaw vans, CNG-run auto-rickshaws, three-wheelers, buses, and pickups.

Gazi Tyres used to sell about 35% of the tyres for rickshaws and rickshaw vans and also supplied tyres for buses and pickups on a smaller scale. Retailers say the increase in tyre prices is due to the halt in the supply of its products and the rising cost of rubber.

Md Fakhrul Islam, executive director of accounts and finance at Gazi Tyres, told the media that they have incurred a total loss of Tk2,000 crore due to the fire and looting. Currently, all types of its tyres are unavailable in the domestic market, he said.

Mahbub Ullah, owner of Habib Enterprise at Bangshal's auto parts market, said, "We are dealers for various tyre companies in the country. Currently, we are unable to meet the demand for tyres. We need 200 pickup truck tyres daily but are only receiving 20. The price of e-bike tyres has increased by Tk400-500, now selling between Tk1,900-2,400, depending on the size. The price of battery-operated auto tyres is Tk1,470."

Mohammad Monir, a seller at Taher & Brothers at Bangshal, said since the fire at the Gazi Tyres factory, the price of rickshaw tyres has increased. Tyres that were previously priced at Tk490 are now Tk650, he said. 

Gazi tyres, which used to cost Tk550, are now being sold for Tk750 whereas the price of Rupsha tyres has gone up from Tk550 to Tk590, Monir said.

Mohammad Azad, a seller at Azad Motors at Bangla Motors, said that the prices of pickup truck tyres increased by Tk500-700. He also mentioned that the prices of motorcycle tyres rose by Tk200-250, now selling between Tk2,200 and Tk2,400. Gazi tyres are no longer available in the market.

Md Nasir Uddin Ahmed, chairman of BFIDC, said the state-run corporation produces 5,500 to 6,000 tonnes of rubber annually. "However, the demand in our country is much higher. To meet this demand, we will plant hybrid rubber saplings. We are working to increase production."

In response to the question of why exports are made despite having domestic institutions, Nasir said, "We sell rubber to domestic institutions first. When domestic institutions do not purchase, we export. Recently, we exported rubber to India."

Due to the increase in global natural rubber prices, the prices in the domestic market have also risen, he said, adding, "We sell rubber according to international price levels."

105 tonnes of rubber shipped to India this month

MA Matin, commercial officer at domestic tyre manufacturer Meghna Innova Rubber Company Ltd, told TBS that for the past three months, BFIDC has not provided it with any rubber. 

"They also exported rubber to India last month. If this continues, the domestic tyre industry will be destroyed. We are now being forced to turn to rubber imports. The rubber shortage is disrupting our tyre production," he said.

He added, "We submit our rubber demand to BFIDC every month. Last time we applied for 200 tonnes but they might provide us with 20 tonnes of rubber by next Tuesday."

A senior official of BFIDC said the corporation shipped 105 tonnes of rubber to India this month against an order booked in May.

"The export order was taken because there was no demand from domestic parties at that time," he said.

BFIDC Deputy Manager (Rubber) Ajanta Deb told TBS that recently, excessive rainfall has disrupted rubber collection in the country. As a result, the corporation has been unable to sell rubber to domestic parties according to demand, he said. 

Due to the rubber shortage, BFIDC has not been able to sell any rubber since August, despite the demand from local parties, Ajanta said. He hopes that they will be able to start selling rubber again from this week.