Adulteration hits rubber industry

Sources say 20 per cent processors involved in the malpractice.

The rubber-based industries, especially the non-tyre sector, are being seriously hit by poor quality of Indian Standard Natural Rubber-20, widely known as crumb rubber. A lot of companies in the non-tyre sector have raised this issue with the Rubber Board.

According to sources, mixing of crumb rubber with poor quality skimmed rubber by a section of processors is the main reason for the poor standard of the product.

Skimmed rubber is produced as a residue while processing latex.

The practice has come to the fore in the last three months. According to sources, of the 60 companies producing crumb rubber, 20 per cent are involved in manufacturing of the poor quality stuff.

Most of the firms that are hit by the practice are small- and medium-level companies, who do not have the necessary equipment to check the rubber quality.

A leading trader here said that the malpractice exposed the failure of the quality control department of the Rubber Board. "The board is not checking the processing units regularly, and due to this lapse the rubber-based industry is suffering.

So far many companies have rejected poor quality crumb rubber being supplied by 10-12 processors. Industry sources urged immediate intervention of the Rubber Board to check the practice, which was destroying both the processing and the manufacturing sectors.

Spot, futures in narrow band

Rubber in the spot market is likely to move in a narrow band of Rs 100 with a negative bias in the week ahead due to buyers keeping a cautious approach, dealers said.

Rubber futures, however, may be choppy, tracking trends in domestic spot and other Asian markets such as Tokyo, they said.

Benchmark RSS-4 grade may stay in the Rs 93-94 a kg range, said N Radhakrishnan, president, Cochin Rubber Merchants' Association.

Rubber price has been steady barring marginal fluctuations for nearly a month and the trend may continue in the next 1-2 weeks, he said.

Buyers making purchases due to lower domestic price compared with rates in Bangkok will check chances of a sharp fall in the commodity, said another dealer.

In the local market, the prices are nearly Rs 8 lower a kg as against the Bangkok rates.

Sections of dealers, however, said sellers may come under pressure in the next 2-3 weeks following indications of a rise in supply due to favourable climate in growing areas in Kerala.

According to Rubber Board's latest assessment, output is unlikely to face a shortfall of 50,000 tonnes as projected in November.

If present trend prevails for another two more months, rubber output in 2007-08 (April-March) may fall only marginally compared with in 2006-07, a board official said.

In 2006-07, rubber output stood at 853,000 tonnes. Expectations of the rise in supply and fluctuations in trend-setting markets such as Tokyo will add to speculation in domestic rubber futures contracts, a dealer said.

Rubber futures in Tokyo, which slumped Tuesday, recovered modestly on Thursday due to buying at lower levels.

Active June contract was at 277.8 yen a kg (Rs 103.71 rupees) on Thursday, compared with 290.1 yen (108.53 rupees) a week ago.

RSS-3 grade in Bangkok, equivalent of the domestic RSS-4 grade, was at Rs 103.31 a kg on Thursday, compared with Rs 103.83 a week ago.

RSS-4 grade in the spot markets in Kottayam and Kochi was at Rs 93.75 rupees a kg on Thursday, compared with Rs 94.50 a week ago.

Rubber futures on NMCE came down as active March contract slipped to Rs 9,720 a quintal on Thursday from Rs 9,876 last week.