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Thursday, Sep 22, 2005

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Rubber stocks continue to rule low

Vipin V. Nair

ON THE RISE: Workers processing latex at a unit near Kochi. India tops in rubber productivity. During 2004-05, rubber yield was 1,705 kg a hectare. Growers have benefited from the increasing yield as prices too have tended to rise on demand growth and exports. On Wednesday, sheet rubber was quoted at Rs 60 a kg. — K.K.Mustafah

Kochi , Sept. 21

STOCK position of natural rubber in the domestic market continues to rule at lower levels as rains in the past months have affected tapping.

According to estimates by the Rubber Board, rubber stock by the end of August would be around 72,000-74,000 tonnes, which would suffice for a month's consumption by the industry.

With the peak tapping season set to commence from next month, the industry is hopeful that supply of natural rubber to the market would improve and stocks build up to more comfortable levels.

Incessant monsoon rains in the past three months had severely hit tapping in Kerala.

The benchmark ribbed smoked sheet (RSS)-4 grade quoted Rs 60 a kg here on Wednesday. For the past one week, the RSS-4 grade has been ruling steady at Rs 60-a-kg levels.

Natural rubber prices had recorded some wild fluctuations in the current fiscal with prices touching a record Rs 70 for a kg in July, only to fall below Rs 60 a few weeks later.

Apart from high international prices, the limited supply of rubber was another factor that pushed up prices.

According to the Board, production during April-August was 2.69 lakh tonnes, marginally up from 2.60 lakh tonnes in the corresponding period last year.

Consumption growth outpaced that of production during the period. Export and import of natural rubber were also higher during the first five months of the fiscal as compared with the same period last year. (See table)

The stock position would have been worse during the period, but for the imports of 33,472 tonnes of imports. The opening stock as on April 1, 2005, was estimated at 1,07,000 tonnes. Rubber Board sources said imports till middle of this month had been 35,077 tonnes, while exports surged to 13,074 tonnes. Exports of rubber from India has picked up, as international prices are now higher by Rs 12-15 for a kg.

Industry sources said though the prospects of exports had brightened because of the widening price difference between the domestic and international prices, shortage of good-quality sheet rubber in the market has come as a roadblock.

"Exports would have been much higher but good-quality sheet rubber is not available now. Growers are unable to properly dry the sheets, and the moisture in the atmosphere is leading to fungus on the sheets," sources said.

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