Financial Daily from THE HINDU group of publications
Wednesday, Jul 06, 2005
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Rubber exports may revive as international prices rise
Vipin V. Nair
Kochi , July 5
NATURAL rubber exports from the country, which languished in the first quarter of this fiscal, may see some revival this month as difference between domestic and international prices widened.
Rubber industry sources say that many agencies such as RubberMark and Pala Marketing Society have bagged export orders as international prices surged. They say export orders for about 3,000 tonnes have already been placed.
The RSS-4 grade traded at Rs 61.25 a kg in the domestic market on Monday, while the international prices of the matching RSS-3 grade are currently ruling at least Rs 6-7 dearer a kg.
"We have started exporting, so far about 500 tonnes of RSS-4 grade," said Prof K.K. Abraham of the Pala Marketing Society. "More enquiries are coming," he said. The Society, which exported 5,000 tonnes of rubber last fiscal, has also bagged orders for 120 tonnes latex, Prof Abraham said.
Exports of natural rubber almost came to a naught in the first quarter of this year as the Government has done away with the financial incentives for rubber exports. As against this, the corresponding period a year ago saw rubber exports of 4,894 tonnes.
Without the subsidies, it would not have been viable to export rubber unless the international prices were at least Rs 5 higher than the local prices.
This situation came about by June this year as domestic prices began to fall and international prices started moving up.
A weaker monsoon that did not hamper tapping in Kerala, which accounts for over 90 per cent of India's natural rubber, was the prime reason for domestic prices to come down.
On the other hand, international prices skyrocketed.
Prof Abraham said the enthusiasm to export rubber had considerably declined since even at the current prices, an exporter would get only about Rs 1.25 to Rs 1.50 a kg exported.
"People are not as eager as last year", he said, pointing out that the domestic prices will soon start moving up in line with international trends. In fact, prices have already started to move up.
Rubber industry sources are of the view that if exports pick up, it will further push up the local prices. Also, monsoon has strengthened over rubber-growing areas and affected tapping. A trader said arrival of rubber in the market is thin.
Also, tyre companies, which had abstained from large-scale buying in the previous months, may get back to the market with a vengeance, as their stock position would have shrunk.
"Tyre companies will have to get back. Some companies have started buying and others will be following suit," a trader said. The higher international prices would automatically close the option of importing.
Given these factors, the domestic rates may also move up in the coming days, the sources said.
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