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Tuesday, Jul 19, 2005

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Limited supply may see rubber prices rise further

Vipin V. Nair

Kochi , July 18

NATURAL rubber prices may continue to rise in the coming days on shortage of the commodity in the market even as the benchmark RSS-4 grade touched the highest rate yet this year.

Rubber industry sources said availability of rubber in the market thinned down as tapping had been affected by heavy rains in rubber-growing areas of Kerala, which accounts for over 90 per cent of the country's natural rubber production.

"Sheet rubber is not coming to the market," a trader said. As against normal trading volumes of around 7,000 tonnes a week, last week saw a volume of just about 3,000 tonnes being traded, he said.

The RSS-4 grade today was traded at Rs 66 a kg, which is the highest price recorded so far in the year, bettering the previous highest of Rs 65.50 a kg in May. Last year, the RSS-4 grade touched Rs 67.50 a kg.

International prices continued to rule at a higher level with the matching RSS-3 grade quoting Rs 73.95 in Bangkok.

Earlier, after touching Rs 65.50 in May, rubber prices had fallen in the domestic market as a weaker monsoon did not affect tapping in June as anticipated.

Prices began to climb up again this month as international prices surged to record levels, opening avenues of natural rubber exports from India. Industry sources said orders for over 4,000 tonnes of rubber had already come in.

At the present price level, rubber exports would be viable even though the exports subsidy is no longer available, the sources said.

The rubber trade is of the view that prices may continue the ascent in the coming days, as there are no signs of a drastic fall visible either in the international or domestic market.

"There is no fear palpable in the market that prices would come down in the high yielding month of August, which is approaching," the sources said.

Since even duty-free imports are not viable for tyre makers at the current international rates, they have to rely on domestic supplies to source their raw material.

The months of April, May, June and July are traditionally low yielding on account of the climatic conditions and rubber supplies tend to be narrow in the period. These factors are likely to affect the price in the coming days, the sources said.

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