KOCHI: As natural rubber prices continue to go south in tandem with the global trend, the production of the commodity in the country has slumped 26% despite 4% rise in consumption in August, 2014.
The rubber prices have already slid 5% this month to Rs 121 per kg and as Kerala, the main production hub of rubber in India enters peak production season, many growers have stopped tapping frustrated by the price situation.
The RSS4 variety used by the tyre makers is at its lowest level since November 2009.
The situation is bleak in the global market as well with the commodity hovering near five-year low in Tokyo Commodity Exchange (Tocom) while it has tumbled to seven-year low in Bangkok.
The spot prices at Bangkok dipped below Rs 99.51 per kg too Rs 100 on Thursday.
“Move by Thailand to offload stockpiles raised worries of oversupply that depressed prices further,” said Anu V Pai, research analyst, Geojit Comtrade. The Thailand government has approved selling 2.10 lakh tonne of rubber from the state’s stockpile.
Despite rise in natural rubber consump tion, offtake by the tyre sector from the local market has stayed subdued and this industry has relied heavily on imports, according to Anu Pai. The overall natural rubber imports for the five months ended August 2014 recorded 36% increase at 1,82,395 tonne and is likely to go up further with the decline in prices.
“The problem of availability in the local market is still there. When tyre companies tried to source 200 tonne from the market, they were not able to do so,” said Rajiv Budhraja, director general of Automotive Tyre Manufacturers’ Association.
Meanwhile, more rubber growers seem to be interested in selling in the latex form.”The field latex prices hovering in the range of Rs 120-125 per kg are slightly better than that of sheet rubber and involves less labour cost. But once the production increases there may not be sufficient takers as the demand for latex is lower than that for sheet rubber,” pointed out Satish Abraham, president of the Latex Manufacturers Association. He fears further decline in the latex prices as the global rubber prices continue to fall.
Meanwhile, the rubber growers in Kerala are planning an agitation as rubber cultivation has become unprofitable.
– India Times
