The prevailing economic crisis has tumbled the local natural rubber[NR] market as the price of bench mark grade, RSS-4 has dropped to Rs 184, a kg today.
India: Natural rubber market tumbles on squeeze in demand
Meanwhile, the global market has managed to maintain the increasing momentum and Bangkok spot trading quoted Rs 163, a kg today. According to leading stockists here, the market is dull for the 4-5 days as rubber based industries, especially non-tyre sector is facing a serious crisis. Advent of cheap imported goods and higher input costs had led the non-tyre SME units into rough weather.
The tyre industry is also facing crisis as offtake from the auto sector has scaled down to a great extent. This has slowed down the demand for NR, though production is down in July and August.
On last Wednesday, RSS-4 quoted Rs 194, a kg, but suddenly went down to Rs 191 on Friday and then to Rs 188 on Saturday. Bangkok market, which quoted Rs 163/kg today was on a low level of Rs 149 on 6th of this month. On July 30th Bangkok market went down to Rs 147, lowest in recent weeks, but started an upward trend from 1st August onwards. The local market was on bull mode till 14th of this month as heavy rain in Kerala affected rubber production very badly.
Monthly output in July dropped 32.4% to 46,000 tonnes as against 68,000 tonnes in last July, according to Rubber Board data. This is the sharpest fall in monthly production during last four years.
This also caused a fall of 18.6% in the cumulative output during April – July period of the current financial year. April – July figure stood at 196,000 tones as against 240,700 tones in the same period of last financial year. Meanwhile, consumption increased marginally at 0.6% in July, as per the data of the board. In July 82,500 tones were consumed as against 82,000 tones.
Cumulative consumption in April – July period dropped to 330,480 tones as against 337,080 tones in the same period of last FY, recording 2% drop.
Meanwhile, as the global prices are getting better, Thai government announced that it had no plans to resume the market intervention scheme to buy rubber directly from farmers to shore up prices.
A price slump led the Thai government to run a scheme from October, 2012 to May this year under which it bought rubber at higher-than-market prices from farmers.