Rubber seen flat next week on adequate supply

Domestic rubber prices are seen flat next week as supply is seen adequate to match demand, traders said Wednesday. Hopes of better delivery due to rains in rubber growing regions and clarity on the value-added-tax will also help prices stabilise, they said.

"Prices are flat today and we can see a trend for the next week," said N. Radhakrishnan, a trader with the National Multi Commodity Exchange of India. "Supply is going to be quite sufficient as rubber tapping is on full wing. Demand is there, so is availability of the commodity."

The lean season is over and supply will gradually improve, said Radhakrishnan, who also heads the Kochi Rubber Manufacturers' Association.

Rubber supplies fall during November-March and starts rising from April. In the Rs 12,000 crore domestic rubber industry, cultivation is concentrated in Kerala and Tamil Nadu.

"We are optimistic about the rise in rubber production as the climate is quite conducive," said Thomas Jacob, a rubber plantation owner.

He said rubber production is likely to improve by 5-10 per cent in 2005-06 (April-March), higher than the 7.17 per cent rise seen in output in 2004-05.

While production last year was 762,000 tonne, consumption rose 5.70 per cent to 760,000 tonne.

Last year was also the first time after three years that output was higher in absolute terms than consumption, said C V Mathew, a Kochi-based trader. An increase in supply due to higher production in the current year will help prices stabilise, he added.

Flat prices will help tyre manufacturers, said Ravindran of the All India Tyre Manufacturers Association.

Tyre and tube makers consume about 47 per cent of the total production. Tyre production data released Friday by the tyre makers' body showed February output rose 1.5 per cent to 4.70 million units.