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Rubber stocks hit all-time low

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George Joseph Kochi
Last Updated : Feb 14 2013 | 7:09 PM IST
Stock was 50,000 tn in Aug against 69,888 tn last year.
 
The domestic natural rubber market is facing a serious crisis as the stock position is currently at the lowest levels ever recorded.
 
According to Rubber Board estimates, the total stock, at the end of August, was 50,000 tonne compared with 69,888 tonne on August 31 last year.
 
Traders in Kochi said the current total stock "� with both growers and traders "� would be around 25,000 tonne, showing a steep fall over five years from 1,78,000 tonne levels in January 2001.
 
A section of the traders felt that the sharp drop in the stock might result in an acute shortage or unavailability of natural rubber, which might lead to swelling of imports during March-May 2007, if global markets remained favourable.
 
They said the present stock was sufficient only for three-week consumption and there would be only a marginal growth in the stock during October-December "� the main domestic production season "� because of increase in consumption.
 
N Radhakrishanan, president, Cochin Rubber Merchants Association, said there would be an additional increment of 20,000 tonne every month to the stock during October-December, taking the total stock to 1,10,000 tonne by January 2007.
 
As domestic consumption and exports are on the rise, the entire stock might be wiped off by March 2007 resulting in a real crisis in the local natural rubber market.
 
However, the shortage can be compensated through imports, if the international pricing suits domestic consumers.
 
In fact, this is for the first time that the country is facing such an acute shortfall in the stock position, and basic economic principles are not working, to the dismay of growers and traders. Usually, when the stock position wanes prices are expected to rise, but the reverse is happening in the natural rubber mart.
 
At the close of 2000-01, the total stock was 1,83,900 and the average price of the benchmark grade (RSS-4) was Rs 30.36 a kg.
 
When the stock dropped to 93,020 on March 31 this year, the average price logically escalated to Rs 66.99.
 
But as the stock has been falling since then, the prices have actually dropped "� rather moving up "� to Rs 78.50 from a high of Rs 115 in July.
 
Traders attribute the price movement in the global futures market for this phenomenon as domestic trading has been highly integrated with the international market for the last couple of years. Rise in exports is one of the main factors for the steep fall in the domestic stock.
 
The total exports grew a whopping 344 per cent to 38,869 tonne during April-August 2006 compared with 11,411 tonne in the previous corresponding period.

 
 

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First Published: Oct 02 2006 | 12:00 AM IST

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