The Hindu Business Line : Rubber prices turn weak on errant monsoon

NATURAL rubber prices continued to slide with the RSS-4 (ribbed, smoked sheet) grade touching Rs 61 a kg on Thursday, as monsoon continued to be weak and tyre makers had very little demand.

But if the rains pick up momentum and continue for 3-4 days over the rubber growing areas, prices are likely to rise again, rubber industry sources said.

The fall in rubber prices has come as a surprise to many of the growers and traders who have been anticipating theprices to rise during June, when tapping is affected by heavy rains. But prices are ruling lower than last year and current international prices.

The RSS-4 grade a year ago traded at Rs 63-63.50 a kg. The current international price for the corresponding RSS-3 grade is around Rs 63.65.

Rubber industry sources blame the price-fall mainly on the weak monsoon prevailing across the State. "Enough tapping was taking place as weather was clear on most of the days," says Prof K.K. Abraham of the Pala Marketing Co-operating Society, a rubber co-operative.

He said the price had come down because of the vagaries of weather.

"We had expected a heavy monsoon. But the rain is now playing hide-and-seek. Also, the quotes in the futures market are impacting spot prices," said Mr N. Radhakrishnan of the Cochin Rubber Merchants Association.

Last year, rubber prices were seen consistently going up during June, barring a few days. This year, however, the trend has been reversed.

According to a rubber dealer, tyre makers are almost keeping away from the market. Major tyre manufacturers like Apollo Tyres, JK Tyres and MRF are not actively buying rubber.

"From the normal uptake of around 1,500 tonnes a day it has come down to just about 500 tonnes," he said.

Rubber imports till the first week of June is estimated to be around 16,500 tonnes. Also, the opening stock of rubber in the beginning of the fiscal was 1.07 lakh tonnes, up by over 30,000 tonnes from the stock position a year ago, giving adequate supply in the market unlike last year when the stocks touched a nine-year low.

If the prices continued to fall and touch Rs 60 a kg, prospects of exports would again brighten, since the international prices are showing signs of moving up.

"Already there are some enquires for exports in the market," the dealer said. "All we need is a 1,000 tonnes export order and the prices will pick up."

But Prof Abraham said unless Indian rubber ruled at least Rs 5 a kg higher than the international rate, exports would not be viable without the export subsidy, which the Government had stopped from this financial year.

Our correspondent reports from Kottayam: Practically there were no buyers in the market even at lower levels. Sheet rubber prices nosedived to Rs 61 from Rs 62 a kg.

According to sources, most of the dealers were not in a position to make fresh purchases as they held excess stocks.

The market was said to be suffering from acute shortage of finance and even selling in small quantities seemed to be putting immense pressure on the prices.

The NMCE rubber futures remained under bear grip recording moderate losses in all contracts. The unfavourable overseas advises depressed the sentiments further. The July contract was quoted at Rs 61.80 (Rs 62.21) August contract at Rs 61.06 (Rs 61.28) and September at Rs 58.90 (Rs 59.07) per kg for RSS 4. Out of 772 lots traded, July topped with 645 lots till mid session.

RSS 3 fell sharply to 156.7 yen from 160.6 Yen at the TOCOM July futures while the same grade closed at Rs 64.63 against Rs 64.41 a kg at Bangkok.

The physical rubber prices per kg were as follows: RSS-4: Rs 61 (Rs 62), RSS-5: Rs 59.25 (Rs 60), ungraded: Rs 57.00 (Rs 58), ISNR 20: Rs 57.25 (Rs 57.50) and latex 60%: Rs 39.50 (Rs 40).

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