The Hindu Business Line : Users not worried over dip in rubber stocks

NATURAL rubber stocks in the country have declined to a level just enough to meet about a month's demand but the user industry is not perturbed by it.

"Though it will be ideal to have two months' stock, we are not worried by the decline. We think there is a balance between the domestic and global market and that will ensure there will be no steep rise in rubber prices," said user industry sources.

According to the United Planters' Association of Southern India (Upasi), stocks in September were around 60,000 tonnes. Of this, manufacturers had 32,000 tonnes, dealers 20,000 tonnes and the rest was with the growers.

The monthly demand for natural rubber in the country is around 55,000 tonnes.

"It is a pretty interesting situation that is prevailing in the domestic market now. The prices are just about reflecting the international trend. If the prices fall, exports will pick up. If that happens, the prices will go up again. That will lead to imports," a tyre industry source said.

Currently, RSS-4 grade, the one used by the tyre industry, is ruling at Rs 54 a kg. Futures prices, on the other hand, are quoted between Rs 54.72 a kg for November and Rs 57.29 for February. In the global market, RSS-3, the equivalent of RSS-4 here, is quoted at Rs 58.16 a kg.

Rubber prices in the domestic market have been see-sawing between Rs 50 and Rs 55 a kg during the last couple of months based on reactions of sellers and buyers. While on Wednesday, sparse arrivals helped prices look up, on Thursday, a decline in Tokyo rubber futures resulted in sales in the domestic market.

Though exports are expected to pick up with increased arrivals, it has been affected by the delay in announcement of incentives by the Government. The Commerce Ministry has reportedly recommended a subsidy of Rs 1.75 a kg for exports of RSS-4 against Rs 3.50 last year, but it has been delayed as the Finance Ministry has sought some clarifications.

Around 12,000 tonnes of rubber have been exported during April-September as against nearly 20,000 tonnes during the same period last year. Rubber exports were higher in the first quarter compared with last fiscal since block rubber exports turned viable.

On the other hand, imports have gone up during April-September at 38,800 tonnes against 22,000 tonnes during the same period a year.

Upasi has projected that 50,000 tonnes of rubber could be exported this fiscal against 69,000 tonnes last fiscal.

As such, the current fiscal began with stocks being at a recent low of 85,189 tonnes against 1.18 lakh tonnes last year. Carryover stocks during the last few years have been over 1.75 lakh tonnes.

Despite the stocks declining to 60,000 tonnes, it is expected to top one lakh tonnes by the end of the fiscal, as per Upasi's projections. This is mainly based on estimates that rubber production could hit a record 7.55 lakh tonnes this year and imports topping 60,000 tonnes (44,200 tonnes last year). During the first half of the fiscal, however, actual production has been estimated at 3.28 lakh tonnes (3.13 lakh tonnes during the same period a year ago), three tonnes lower than projections. At the same time, consumption has been estimated at 3.67 lakh tonnes (3.55 lakh tonnes), up a tad over projections of 3.66 lakh tonnes.