Rubber production rise drives price reversal, Indian rubber now cheaper

KOCHI: The rubber import story in India will soon get a new script. The practice so far was domestic rubber price was higher which encouraged industries to import latex in huge numbers. A trend reversal is happening now. The overseas price of rubber is Rs 10 per kg is costlier than Indian prices for the past one week. With duties the import cost of rubber is now Rs 170/kg whereas the Indian price is Rs 130 per kg.

But, a shortfall in the Northeast Monsoon now remains a concern. According to industry players, it will reduce production which will be visible from January. “Due to demonetisation there will be 30-40 per cent fall in tyre sales in the country. This may slow down the sector. But now Indian rubber prices are cheaper and hence it will be good for growers. The long term story of rubber is intact,” Tomy Abraham, President, Indian Rubber Dealers Federation said

Natural rubber production increased 15 per cent to 60,000 tonnes in October and the consumption grew four per cent to 86,000 tonnes, according to Rubber Board data.

“Production and consumption stood at 52,000 tonnes and 82,650 tonnes, respectively, in the year-ago month. Imports of natural rubber went up three per cent to 44,520 tonnes in October. During April-October period of 2016-17, production increased nearly 11 per cent in the corresponding period of the previous year,” says the board.

“Base effect is coming into play and real increase in production is yet to be felt. Moreover there are disruptions in arrivals of new stock due to demonetisation. So availability of natural rubber continues to be a concern even though production has gone up,” said Rajiv Budhraja, Director General, Automotive Tyre Manufacturers’ Association (ATMA), adding that the increase in natural rubber imports during April-October period is affecting the growers.