Rubber prices in the Indian market have spurted in the past two months on lower production and shrinkage of stocks. In the near term, prices are expected to cross Rs 200 per kg before the end of the lean season.
Rubber prices have been moving between the range of Rs 150 and Rs 165 per kg since the beginning of the year due to lower consumption. The economic data from Europe or China too have not been much supportive for rubber prices. In the Indian market, however, prices started to spurt in the last week of April.
In the third week of April, rubber prices stood at Rs 153 per kg. Hot summer followed by heavy and continuous rains has hit the tapping activities in the rubber-growing areas of Kerala and the prices also moved up due to lower production in the lean season. As the prices moved above Rs 180, most of the farmers sold out their old stocks and in the absence of fresh production, supply got affected, further hiking the prices,” said Hareesh V, senior analyst, Geojit Comtrade. As per the Rubber Board statistics, production was down by 13 per cent in June.
Prices moved to a recent high of Rs 194.37 in the National Multi Commodity Exchange on July 9 and were trading around Rs 192 on July 19.
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However, prices in the international market have remained steady with a negative bias as major rubbe-producing countries like Malaysia and Thailand are holding large stocks of rubber. The gap between the international and domestic prices has been widening.
In the Bangkok market, rubber prices were trading around Rs 150 levels and in the Malaysian market it was at Rs 133 per kg in rupee terms. Price difference of over Rs 50 usually leads to higher imports by tyre and non-tyre rubber manufacturers.
However, the data by Rubber Board has not started showing significant increase in imports as of June. “The tyre manufacturers have to place import orders two-three months in advance and they have started doing it in June. So it will take some more time when the imports will take care of the supply shortage and cool down the prices,” said Hareesh.
He expects prices to remain firm till the end of August. The import orders would be delivered by the time and the tapping also will be resumed after the monsoons. However, till then prices can even move above Rs 200 per kg levels.
Rubber at NMCE has a strong resistance at Rs 200 and if it crosses that level, prices can move to Rs 212. Once the lean season ends, prices can cool down to Rs 160 to Rs 170 levels, but are not expected to fall below Rs 150 levels.
Source: mydigitalfc.com
