Highlights
 

•  Export earning crosses US$1 billion in 2024, up 7.66% from 2023
  
   
• Local downstream producers appalled over rubber yield fall
  
   
• Domestic tire industry in a bid to consolidate
   

Sri Lanka’s rubber industry strengthened its position in global markets in 2024, driven by rising demand for its products in the healthcare and automotive sectors. Amid shifting trade dynamics, the industry maintained steady growth in the year, driven by the forays of industrial and surgical gloves that capitalized on evolving market needs.

During January-December 2024, total export earnings from rubber and rubber-finished products saw a 7.66% increase from 2023, reaching US$ 1,001.54 million. This growth was supported by a 23.09% year-on-year rise in the exports of industrial and surgical gloves of rubber and a 1.39% increase in the exports of pneumatic and retreated rubber tires and tubes.

In December 2024 alone, export earnings from rubber and rubber-finished products increased by 1.41% year-on-year to US$80.74 million. This growth was largely driven by a 36.88% surge in exports of industrial and surgical gloves of rubber, reinforcing Sri Lanka’s dominance in the medical and industrial safety sectors. The steady rise in demand for these products has helped mitigate challenges in other segments, contributing to the island nation’s rubber industry’s overall resilience.

The expansion in these key product categories highlights Sri Lanka’s ability to capitalize on shifting global market demands, underpinning its position as a key player in the international rubber industry.

Source: SL Export Development Board and Helixtap

Shift to palm oil poses threat to rubber

Meanwhile, the fall in domestic natural rubber production due to declining yields and the conversion of rubber plantation lands for more rewarding crops, such as palm oil, has created significant challenges for industries dependent on rubber in Sri Lanka. The shortage is limiting their production capacity and hindering market expansion, raising concerns among industry stakeholders.

Local tire manufacturers have highlighted the shortage of dry rubber as a critical hindrance to meeting both domestic and international demand. Some of the domestic tire producers require around 25-30 tons of rubber daily, with much of it sourced through imports—putting additional pressure on foreign reserves. Several manufacturers downstream of rubber emphasized that inadequate local supply is restricting their ability to scale up operations.

Industry representatives have also pointed out the need for competitive local pricing to match global market rates. Without such measures, manufacturers struggle to remain competitive in export markets. Analysts say there has not been any systematic replanting efforts, which have further strained the sector. A previous initiative aimed at increasing annual rubber production by 60% over five years has not made much headway under the present dispensation also.

Forcing the rubber industry on the back foot, plantation companies have urged authorities to permit the conversion of underperforming rubber estates into palm oil plantations, citing economic viability. Calls for policy decisions on this matter have been ongoing.

Tea and rubber plantations account for nearly 350,000 hectares on the island nation with over 125,000 hectares belonging to rubber. However, shifting land-use patterns and inconsistent policy direction continue to challenge the long-term sustainability of rubber production.

Tyre industry expands despite challenges
 

Despite these challenges, a leading Sri Lankan tire manufacturer has expanded its export footprint to 38 global markets as of 2024. The company, Ferentino Tyres, marking its third anniversary in January 2025, has introduced an expanded range of tire sizes, catering to both local and international demand.

After holding discussions with Trade and Commerce Minister Wasantha Samarasinghe, Ferentino also explored ways to provide Sri Lankan customers, recovering from the economic morass post-pandemic, access to premium-quality tires that meet international safety and performance standards at affordable prices. The company says its efforts in giving quality rides to Sri Lankan motorists are fructifying, with its production of expanded tire sizes. The company’s import of vehicles after a gap coincides with it, giving the initiative an extra push.

The company has sought to integrate cutting-edge technology with local expertise, resulting in the establishment of a world-class manufacturing facility in Horana. Over the past year, key markets in North America, Europe, South America, and the Gulf region have been unlocked, buttressing Sri Lanka’s presence in the global tire industry.

Industry bid to rein in imports

Meanwhile, the Sri Lankan Ministry of Trade recently convened a meeting with representatives of the local tire manufacturers’ association to explore ways to bolster the domestic tire industry. The discussions focused on reducing dependence on tire imports to ease pressure on foreign exchange reserves and promote locally manufactured products.

The association representatives noted that despite the presence of locally produced tires, a considerable portion of US dollar reserves continues to be spent on imports, leading to market oversupply as well. To address this, industry representatives proposed import restrictions.

Finally, an agreement was reached at the meeting to lower the prices of domestically produced tires, ensuring affordability while maintaining international quality standards. The Trade Ministry underscored the importance of promoting local products as a means to boost the country’s economic resilience and mitigate challenges related to foreign currency outflows.