 "Global rubber price below Rs 100 after a gap of 6 years")
For the first time since 2008, global price of natural rubber [NR] today dropped below Rs 100, quoting Rs 99 for bench mark RSS-3 grade at Bangkok market. Latest OPEC decision not to reduce crude production suddenly upset the global market and TOCOM futures exchange also recorded lower tags on various contracts.
Earlier, the price dropped below Rs 100 mark in October, 2008 when the monthly average prices was Rs 92/Kg. Bangkok market nosedived to Rs 75 in November, 2008 and was back again at the Rs 100 mark in August, 2009. From then onwards the international market was on a buoyant mode, but currently it faces the most serious crisis in the history of natural rubber. As the market is reeling under pressure due to a global supply glut, the crisis is likely to intensify further as crude oil price is crashing day by day. Prices caved in 1-2% at TOCOM Futures exchange. Local price today dropped to Rs 116/Kg, lowest since 2008.
Experts told Business Standard that the Bangkok market suddenly plunged by Rs 2 per Kg on Friday when OPEC nations decided to maintain the output at 30 million barrels per day. This will further intensify the crisis in natural rubber business. The market crashed to a recent low as synthetic rubber [SR] is more attractive to end users, especially tyre producers. It is likely that world over consumption of synthetic rubber may increase 10% as the price is more attractive. In India, consumption of SR has increased sharply during last couple of years and the NR- SR ratio now increased to 70:30 which was 75:25 earlier. Because of quality advantage tyre companies in Europe use more synthetic rubber. Due to the shift in the consumption pattern in favour of SR, natural rubber market will continue in the doldrums.
N.Radhakrishnan, an expert in rubber trading and former president of Cochin Rubber Merchants Association [CRMA] told Business Standard that the local situation is so grave as the price is swiftly moving southward. He said that price in domestic market is likely to drop to Rs 100. Standard Malaysian Rubber [SMR] is available at Rs 93/Kg in Bangkok and this will pave way to more imports to India. This in turn will tumble the local market and the crisis is likely to deepen further, he added.
Earlier, the price dropped below Rs 100 mark in October, 2008 when the monthly average prices was Rs 92/Kg. Bangkok market nosedived to Rs 75 in November, 2008 and was back again at the Rs 100 mark in August, 2009. From then onwards the international market was on a buoyant mode, but currently it faces the most serious crisis in the history of natural rubber. As the market is reeling under pressure due to a global supply glut, the crisis is likely to intensify further as crude oil price is crashing day by day. Prices caved in 1-2% at TOCOM Futures exchange. Local price today dropped to Rs 116/Kg, lowest since 2008.
Experts told Business Standard that the Bangkok market suddenly plunged by Rs 2 per Kg on Friday when OPEC nations decided to maintain the output at 30 million barrels per day. This will further intensify the crisis in natural rubber business. The market crashed to a recent low as synthetic rubber [SR] is more attractive to end users, especially tyre producers. It is likely that world over consumption of synthetic rubber may increase 10% as the price is more attractive. In India, consumption of SR has increased sharply during last couple of years and the NR- SR ratio now increased to 70:30 which was 75:25 earlier. Because of quality advantage tyre companies in Europe use more synthetic rubber. Due to the shift in the consumption pattern in favour of SR, natural rubber market will continue in the doldrums.
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As per the Rubber Board data during April – July period of the current financial year 37.3% increase was noted in the domestic SR production, while this was only 12.8% in the case of NR. Also 8.8% rise was recorded in the case of consumption of SR, while NR consumption had increased just 2.9%. An expert from the tyre industry told Business Standard that the trend is more obvious after July as SR is a cheaper substitute for NR and the latest OPEC decision will naturally favour SR market. SR import to India during April – July period also increased to 133,321 tones as against 126,781 tones in the same period of last FY.
N.Radhakrishnan, an expert in rubber trading and former president of Cochin Rubber Merchants Association [CRMA] told Business Standard that the local situation is so grave as the price is swiftly moving southward. He said that price in domestic market is likely to drop to Rs 100. Standard Malaysian Rubber [SMR] is available at Rs 93/Kg in Bangkok and this will pave way to more imports to India. This in turn will tumble the local market and the crisis is likely to deepen further, he added.