Falling rubber prices are causing concern among plantation owners. The price of RSS Grade-4 natural rubber is down by 26% in the past one year to Rs.120 per kg.
International prices are also at a decadal low.
Commodity experts say the slide is partly a fallout of plummeting crude oil prices. Brent crude is down to a record low of $47.5 a barrel. With this, synthetic rubber has become cheaper. Meanwhile, demand from China, which is the largest producer of tyres, has weakened on account of an economic slowdown.
Demand is slack in India, too, as automobile growth rates have moderated and are likely to swing back only a year from now.
This is good news for users.
But plantation owners are worried as rubber prices in many regions have reportedly fallen below cost of production.
Even purchases by some countries like China to build inventory are unable to shore up prices.
Given this scenario, there could be a shift from rubber to other crops given that a reversal in prices seems distant.
– Live Mint
