Crisis deepens in natural rubber mart as bench mark grade RSS-4today quoted Rs 160/Kg. Though there is steep fall in production this year, market is on a depreciating mode due to demand crunch and sharp rise in imports.
Price dropped 10% in just three weeks time as the market quoted Rs 177, on last week of last month. The fall is much more serious (17%) when consider the average price in July which was Rs 192/kg. Today’s price is the lowest, since this February.
Growers allege that import is the main villain for the crisis in local market. Rubber is freely coming to India and industry not keen on buying from local markets, they said.
Market sources told Business Standard that rubber is available even at Rs 158/Kg since supply is expected to go up during October – January. This is the main production season in the case of natural rubber and the average monthly output is likely to go up 1,00,000 tones.
Anticipating a good season ahead, there is no urgency in buying rubber, hence the fall in prices, said N.Radhakrishnan, a leading stockist and former president of Cochin Rubber MerchantsAssociation (CRMA).
Meanwhile, Rubber Board chairman, Sheela Thomas said that total annual production would drop 9.4 % during this financial year. She said that annual output will be 8,70,000 tones only as against 9,60,000 tones recorded in last financial year. She cited heavy monsoon and leaf falling decease for the drop in production.
This loss would off set in next financial year as the tapping area is likely to be increased to 518,000 hactares in 2013-14 from 504,000 hactares in 2012-13. As per the board’s estimates stock as on September 30 is 230,000 tones. Growers said that stock is still higher as rubber based units are not actively taking rubber for the last couple of weeks. This adds to the woes of the market.
On account of the price advantage in the global market import shot up a whopping 208% in September at 45,581 tones, according to the latest data of the Rubber Board.
This is the highest ever monthly import to the country. Based on this, cumulative import during April – September period increased to 179,292 tones, as against 112,641 tones in the same period of last financial year, recording a growth of 59%.
The sharp rise in import is mainly because of the lower price tags in Bangkok market where the rate is Rs 157/Kg today. The gap between local and global market was much wide till September as global prices were lower by Rs 15/Kg than India. The gap is narrowing now. Standard Malaysian Rubber (SMR-20), which is widely used by tyre makers, is having a price tag of Rs 144/Kg.
Moreover, Thailand, world’s largest exporter had exempted rubber from export cess for four months starting from September. So import is still a viable route for the rubber based industries, especially for the tyre manufacturers. During April – September period production dropped 13.3% at 3,43,000 tones as against 395,700 tones.
However, there here is set back on local consumption also as 2.7 % drop recorded during April – September. 4,89,015 tones were consumed during the period as against 5,02, 330 tones in the same period of last financial year. This is due to the drop in sales of automobiles in India.
Meanwhile, Left Democratic Front (LDF) has urged the central government to drop the import incentives immediately in order to ‘save’ the1 million plus rubber growers. Political parties in the ruling United Democratic Front (UDF), especially Kerala Congress are on war path against the crisis.
Source: India Times
