With a relative surge in world prices of natural rubber (NR) as compared to domestic ones, the hitherto heavy inflow of imports seems to have got arrested.
The benchmark grade RSS- 4 was quoted today at Rs 106 a kg locally, while the international price increased sharply to Rs 112 a kg. This gap is also likely to enhance the export from India, affected badly due to higher local prices. India’s export in june was just 16 tonnes and was nil in both July and August. But the changed climate in the global market and the increase in production in India is expected to mean much export in the October-January period. However, there is an issue of the poor quality of local rubber.
A few weeks earlier, global prices of NR were sharply lower than the local prices. In June-July, the local price of RSS-4 grade was Rs 100, while the international price had dropped to Rs 83 a kg. And, imports had crossed 100,000 tonnes in the first week of September. According to the Rubber Board, total import in the April–September period were 117,898 tonnes against 38,273 tonnes in the same period last year.
But the import slowed in September, to 20,172 tonnes. And, import through advance licenses is almost over now. With the present international prices, the 20 per cent duty on import of NR will make it unviable. So, total yearly import is expected to not exceed 150,000 tonnes in 2009-10. Local production should increase sharply in the October–December period, thanks to winter, so local prices are also expected to come down further.
Which also means more exports. Total export in the April–September period had dropped to 1,352 tonnes against 30,960 tonnes in the same period last year. Meanwhile, the huge increase in imports had caused a sharp rise in the stock of rubber in the country. According to Rubber Board data, the stock as on September 30 was 203,000 tonnes against 128,000 tonnes on the same day a year earlier.
Malaysia rubber output
Malaysia, the world’s third rubber producer, expects output to rise by 50 per cent to as high as 1.5 million tonnes by 2020 as it introduces plants cloned for higher yields and better harvesting methods.
A rebound in Tokyo rubber futures from a six-year trough below 100 yen a kg in early December could also see many Malaysian palm oil companies decide to plant more rubber, the Malaysian Rubber Board (MRB) said on Monday. Productivity stands 1.4 tonnes per hectare, nearly 30 per cent lower than top producer Thailand’s 1.8 tonnes but Malaysia aims to boost yields to as much as 1.8 tonnes per hectare in three to five years — a move which could eventually lift annual output to more than 1 million tonnes. MRB estimates Malaysia’s total output of natural rubber is expected to increase to 1.3-1.5 million tonnes in 2020 with these steps. Current production now hovers at 1 million tonnes yearly.