A strong bearish trend is prevalent in the global natural rubber (NR) market, as Bangkok spot trading on Thursday quoted a lower price of Rs 197 a kg, compared to Indian markets, which quoted Rs 198 a kg for RSS-4 grade.
The trend in the global market is due to reports of low demand from China, the largest consumer, which is likely to increase production this year. But, Indian counters were trading at high prices due to reports on poor stock and low supply, as it is an off-season for plantations.
The price in Bangkok fell by Rs 3 within a week and has fallen by Rs 5 during the past four weeks. Contrary to this, the local price tag rose by Rs 5 a kg in just five days. The price has increased by Rs 12 a kg in a month. Interestingly, local and global counters are now almost at par. The Indian tag was lower than the global ones a week before as the local market quoted Rs 192 a kg on March 17, when the global price was Rs 200 a kg.
The latest data by the Rubber Board shows that as on February 29, the total stock was 244,000 tonnes, compared to 315,339 tonnes a year ago. The low stock estimates has made the market, especially future counters, panic.
N Radhakrishnan, an expert and president of the Cochin Rubber Merchants Association, said the saleable stock might be around 100,000 tonnes only. The production in March, April and May will be lower as summer heat stalls tapping of trees. The monthly production in March and April will be 40,000-45,000 tonnes, as against 57,100 tonnes in February. There was a marginal dip in output in February, as 57,600 tonnes were produced in February 2011. Consumption in February registered a marginal rise of 2,500 tonnes, to 80,500 tonnes.
According to the Board data, consumption had exceeded production by 39,420 tonnes during April-February of the current financial year. During the period, total production was 841,500 tonnes, while consumption increased to 880,920 tonnes. According to industry estimates, this gap might be more than 100,000 tonnes by the end of this financial year.