Tyre exports 40% up, but worries continue

Sri Lanka's exports in the seven months to July rose 40 percent to US$6,080 millions from a year earlier, with apparel growing 44 percent, an export promotion official said.


Export Development Board chairman Janaka Ratnayake said exports to the US rose 37 percent to US$1.2 billion. Exports to Europe rose 41 percent US$2.1 billion. Exports to India was up 34 percent to US$ 320 million. He said rubber products reached US$494 million -up 81 percent, according to local media reports.


Sri Lanka is a key exporter of solid rubber tyres, and the industry even imports raw rubber for manufacture.


Meanwhile, there is a fear in the Lankan tyre industry that it is facing an unfair competition from under invoiced imports to the country. Chairman of Kelani Tyres PLC (TYRE) Chanaka De Silva lamented that while the sudden escalation of Natural Rubber prices in the world market with high price of petroleum based raw materials has created total mayhem in the International tyre markets,  unfair competition is a challenge.


“We believe that the representations we have made in this regard to authorities will be taken seriously and necessary action will be put in place to circumvent this serious problem, which in my opinion is causing an annual loss exceeding Rs. 500 million to the Exchequer.” De Silva stresses in the latest annual report of the company.


Further, according to De Silva, a major negative phenomenon that the industry experienced quite unexpectedly during the year under consideration is the  sudden escalation  of Natural Rubber prices in the world market from its steady US$ 2.90 level (pre July 2010) to the current high of US$ 5 per kg (an increase of over 72%).


Whilst all attempts are being made to absorb these increases in tyre selling prices, due to inconsistent policies of competitors De Silva says that Kelani Tyres have still not been able to completely hedge against these increases.


De Silva goes on to explain that the government has set the base for the tyre industry to thrive in the new post-war economy by placing much emphasis of its activities for the development of Sri Lanka’s road network and highways.


“In light of these emerging opportunities, we have to continuously make changes by further improving the quality of our products, in addition to new sizes and necessary expansions especially in our Radial tyre operations,” he suggests.


De Silva highlights that during the year, Kelani tyre group in achieved a gross sale exceeding Rs. 8 billion and its Passenger Car tyre – the CEAT Radial became the largest single branded Radial tyre in the market.


He also notes that Kelani Tyres had invested over Rs. 105 million in upgrading machinery to manufacture high quality truck tyres in line with that of leading Indian premium bias tyre brands while increasing overall production capacity by approximately 200 MT (+18%).