Kochi: Weak global cues, rising imports and subdued demand pull down rubber prices in the domestic market. The prices have dropped over 8% to Rs 180 per kg this month. Although the commercial and passenger vehicle segments have not shown any significant pickup during the festival season, tyre companies have been importing rubber to cash in on low international prices.
Global rubber prices have shed 10 a kg during the month to reach Rs 163 per kg. The steps taken by top three rubber producers – Thailand, Indonesia and Malaysia – to cut exports have failed to arrest the slide while rubber imports by China continue to decline. Besides, an uncertain economic situation in the UShas also aided the fall in prices.
Indian rubber prices seem to be moving in tandem with the international prices. The difference has narrowed down from Rs 20 per kg to around Rs 15 now. Evening rains in the last couple of weeks have hindered tapping, leading to a tightness in supply. “Apart from the lower price, better quality is prompting tyre companies to go for more imports of rubber,” said C P Krishnan, director of Geojit Comtrade.
During April-September 2012, rubber imports touched 1,12,640 tonne, up by 23% over the same period in the previous year. The shipments coming into the country were contracted in the last few months when international prices of block rubber were lower by Rs 30 per kg compared to Indian sheet rubber.
Imports will continue as growers have released much of their stock when domestic prices hit Rs 190 per kg. “They (tyre companies) need to replenish the stock in the coming weeks. But if the price goes below 180 per kg, they will be reluctant to sell,” said a leading dealer. But he said tyre companies will be forced to buy more from the local market as the difference between global and domestic prices will narrow down further in the coming days.
The surge in automobile sales expected during the festival season has not happened much to the worry of the tyre makers. Given the dull demand and falling international prices, local rubber prices may drop further. The November contract of rubber on NMCE ruled at Rs 177 per kg on Wednesday.
Source: India Times
