Demand from Chinese automobile sector has been far from desirable
Rubber prices were hovering around Rs 153 per kg in the third week of April. The hot summer followed by heavy and continuous rains hit tapping activities in the rubber-growing areas of Kerala. Lower production during the lean season saw prices moving up.
As prices crossed Rs 180 per kg, most farmers sold their old stocks. In the anticipation of further increase in prices to the level prevailing in 2011, some farmers have been hoarding stocks. Rubber prices had hit all-time high of Rs 247 per kg in April 2011.
The scarcity of stocks in the market lifted prices to Rs 198 in the NMCE by July 8. In the spot market, prices moved past Rs 200. By then, most tyre manufacturers had placed import orders in the international market. So prices started correcting, once deliveries of imported stocks commenced.
Prices had come down to Rs 175 per kg by the third week of August. Meanwhile, the rupee fell close to 70 levels in the last week of August and prices of commodities, including gold, copper and crude moved up. Synthetic rubber being a byproduct of petroleum, the hike in crude prices also helped some recovery in natural rubber prices.
Prices moved up to Rs 188 from Rs 175 in the first week of September. “However, prices have been continuously slipping on weak fundamentals since the second week of September, when the lean season had ended and tapping resumed in Kerala. Import orders were delivered to the tyre manufacturers and the demand for domestic rubber declined,” said Hareesh V, senior analyst, Geojit Comtrade.
International prices have remained weak for most of 2013. Efforts by Thailand, Malaysia and Indonesia to hike prices by curbing exports have not been fruitful. Demand from the automobile sector, especially in China, has been far from desirable.
Indian rubber has been quoting Rs 15 to Rs 20 higher than international varieties, and so the consumers preferred imports. According to the Rubber Board, imports in September surged 208 per cent to 45,581 tonnes against 14,779 tonnes in the same month last year. Between April and September, imports were up 58 per cent compared with the same period last year.
“The fundamentals do not support any price rise, especially when we have entered the peak season,’ said Hareesh.
The immediate support for rubber at NMCE is Rs 164, followed by Rs 158 and Rs 152. “However, there is pressure on the Union government from the traders to raise the import duty on rubber. The current duty of Rs 20 per kg favours imports, considering the price difference between international and domestic prices. Demands have been made to hike the duty to Rs 34 per kg. If the government budges, rubber imports will come down,” he said.
On the other hand, tyre and non-tyre manufacturers have been maintaining that imports to the extent of production deficit should be allowed as per the current duty structure.
Demand from Chinese automobile sector has been far from desirable
Rubber prices were hovering around Rs 153 per kg in the third week of April. The hot summer followed by heavy and continuous rains hit tapping activities in the rubber-growing areas of Kerala. Lower production during the lean season saw prices moving up.
As prices crossed Rs 180 per kg, most farmers sold their old stocks. In the anticipation of further increase in prices to the level prevailing in 2011, some farmers have been hoarding stocks. Rubber prices had hit all-time high of Rs 247 per kg in April 2011.
The scarcity of stocks in the market lifted prices to Rs 198 in the NMCE by July 8. In the spot market, prices moved past Rs 200. By then, most tyre manufacturers had placed import orders in the international market. So prices started correcting, once deliveries of imported stocks commenced.
Prices had come down to Rs 175 per kg by the third week of August. Meanwhile, the rupee fell close to 70 levels in the last week of August and prices of commodities, including gold, copper and crude moved up. Synthetic rubber being a byproduct of petroleum, the hike in crude prices also helped some recovery in natural rubber prices.
Prices moved up to Rs 188 from Rs 175 in the first week of September. “However, prices have been continuously slipping on weak fundamentals since the second week of September, when the lean season had ended and tapping resumed in Kerala. Import orders were delivered to the tyre manufacturers and the demand for domestic rubber declined,” said Hareesh V, senior analyst, Geojit Comtrade.
International prices have remained weak for most of 2013. Efforts by Thailand, Malaysia and Indonesia to hike prices by curbing exports have not been fruitful. Demand from the automobile sector, especially in China, has been far from desirable.
Indian rubber has been quoting Rs 15 to Rs 20 higher than international varieties, and so the consumers preferred imports. According to the Rubber Board, imports in September surged 208 per cent to 45,581 tonnes against 14,779 tonnes in the same month last year. Between April and September, imports were up 58 per cent compared with the same period last year.
“The fundamentals do not support any price rise, especially when we have entered the peak season,’ said Hareesh.
The immediate support for rubber at NMCE is Rs 164, followed by Rs 158 and Rs 152. “However, there is pressure on the Union government from the traders to raise the import duty on rubber. The current duty of Rs 20 per kg favours imports, considering the price difference between international and domestic prices. Demands have been made to hike the duty to Rs 34 per kg. If the government budges, rubber imports will come down,” he said.
On the other hand, tyre and non-tyre manufacturers have been maintaining that imports to the extent of production deficit should be allowed as per the current duty structure.
