India: Rubber price falls below Rs 120/kg

For the first time since 2009, natural rubber price dropped below Rs 120/kg as bench mark grade RSS-4 today quoted Rs 118/Kg. The average price quoted during November 2009 was Rs 112. The global market is also on a sluggish mode. To the dismay of the local rubber growers, Standard Malaysian Rubber [SMR], the hot cake of importers in India, dropped to 95 /Kg in the international market. In futures at NMCE, prices are moving in tandem with the spot market.

As the market slumps Indonesian rubber producers held on to stocks this week as prices tumbled to five-year low.

However, with prices falling continuously, major producers like Thailand, Malyasia and Indonesia are meeting next week to discuss measures including supply cut to support prices.

China’s Standards Administration published a draft law in August that would require compound rubber to contain not more than 88 percent of natural rubber from January 1 next year. The draft is still open for comments but has been criticised by industry participants who said the new mixture, which lowers the natural rubber content from the current 95-99.5 percent, will be difficult to produce. A Thailand-based dealer said Chinese buyers might still be keen to import compound rubber before the new rules are implemented, but will likely to wait. Due to falling prices, however, farmers in Indonesia have stopped tapping.

According to Anu V. Pai, Research Analyst analyst of Geojit Comtrade, despite tight supplies to the market, demand has been subdued from the tyre sector. He said, in spite of tight supplies, poor demand from the tyre sector, bulging imports and weakness in the overseas market continues to hammer down the commodity. However, limited arrival to the market is likely to cushion the falling prices. While the market is in the midst of peak production phase that commences by October, arrival to the market has been low as tapping is yet to resume in full swing after the monsoon break owing to unfavorable weather and low prices, she added.

Meanwhile, Thailand, Indonesia and Malaysia are likely to meet on November 20-21 to discuss plans to set prices together and reduce supply. Indonesian Rubber Association makes a second appeal to its members to impose strict limit on sales until the second quarter of 2015. The market is also on a fear grip as the crude price is slumping. This will further weaken the natural rubber mart as synthetic rubber [SR] is much cheaper now and ture makers may increase its use.

Average price – A comparison

Nov 2008 – Rs 76/kg

Nov 2009 – Rs 112

Nov 2010 – Rs 198

Nov 2011 – Rs 195

Nov 2012 – Rs 172

Nov 2013 – Rs 156

[Source : Rubber Board]