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India Rubber prices drop on global cues, despite fall in production

On Thursday, further weakening in spot rubber prices for RSS grade, ungraded rubber and latex was report tracking fall in TOCOM. Meanwhile, latex (60%) shed the overall gains partially on buyer resistance after improv..

MUMBAI/KOTTAYAM (Commodity Online): India spot rubber prices have fallen from Rs 16350 per 100 kg to Rs 15650 per 100 kg levels on global cues despite fall in production although weak tyre industry demand may be weighing on prices, according to analysts. At Tokyo Commodity Exchange, rubber proices are heading for biggest weekly loss since April on speculation that China’s economy is slowing which in turn will weaken demand for automotive tyres.

The contract for delivery in June on the Tokyo Commodity Exchange fell as much as 1.1 percent to 254.1 yen a kilogram ($2,424 a metric ton), matching a two-month low reached Jan. 7. Futures traded at 255.8 yen at 10:33 a.m. local time and have lost 6.8 percent this week, the most since the five days through April.
Rubber for May delivery on the Shanghai Futures Exchange lost 0.3 percent to 16,810 yuan ($2,776) a ton. It fell to 16,735 yuan on Jan. 8, the lowest close for a most-active contract since September 2009.

On Thursday, further weakening in spot rubber prices for RSS grade, ungraded rubber and latex was report tracking fall in TOCOM. Meanwhile, latex (60%) shed the overall gains partially on buyer resistance after improving continuously for the past couple of sessions.

At National Mutli Commodity Exchange (NMCE) January futures closed at Rs 15600 (Rs 155.46), February at Rs 15849 (Rs 15804), March at Rs 161 (Rs 16051), April at Rs 16450 (Rs 16456) and May at Rs 16700 (Rs 16564) for RSS 4 while June futures remained inactive.

Meanwhile, rubbeer industry associations pointed out that recent drop in prices had nothing to with increased imports and more to do with global market trends. Natural rubber growers have blamed increased imports for the crisis facing the industry.

According to the newly released Rubber Board data, in April-December period of 2013-14, natural rubber imports have increased by 91,135 tonne, to a total of 264,576 tonne, a growth of 40% compared to 173,441 tonne brought in during the same period of 2012-13. On the other hand, the decline in domestic natural rubber production in the same period is 70,200 tonne, leaving a net excess of only 21,843 tonne.

India’s production of natural rubber for 2013-14 was estimated at 960,000 tons and consumpiton at 1,020,000 tons but actual production may fall to 8,50,000 tons as intensive rains and lower prices caused decline in production.according to market observers.In 2012-13, India had produced 912,200 tonnes, a per cent rise on a year ago. Despite lower production in April-December during 2013-14, consumption did not decline significantly: Only a two per cent fall. It dropped to 728,080 tonnes, compared to 742,480 tonnes a year ago.

The production of natural rubber has fall 10 per cent during April-December in the current financial year, according to the Rubber Board, at 627,000 tonnes against 697,200 tonnes a year ago.

This might affect availability in four-five months. Board sources said production this financial year would be 870,000 tonnes.

Source: Commodity Online

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