Heavy rains keep rubber buoyant

Natural rubber [NR] was trading between Rs 64 and Rs 68 on most markets but prices could rise soon as production and stocks had come down drastically.

The increase in NR prices had affected user industries, especially the non-tyre sector, badly. This had led to some fall in demand for NR. One estimate indicated 10 per cent fall in demand at Kochi.

The price of RSS- 4 grade was at Rs 67.50 per kg and prices for all other varieties except crumb rubber were steady above Rs 60.

NR supply declined after heavy monsoon showers. Production had been down for two months. According to preliminary estimates, NR production fell by 30 per cent from last season's output.

Industry consumed 62,000 tonnes every month, of which the non- tyre segment demand was 30,000 tonnes. Supply of non- graded sheet rubber, commonly used by non-tyre sector, had been hit the hardest.

Non-tyre industry sources said some of the units could close down as they could not buy rubber at the high ruling price. Interestingly, NR prices were the highest in India as prices overseas were ruling much lower.

Rubber Board sources said the stock position as on March 31 was 77,000 tonnes, against 1,00,000 tonnes on March 31 last year. Stocks had bottomed out at 60,000 tonnes at the end of June 2004. This had happened on account of increased export in the last two fiscals.

The tyre industry used crumb rubber and RSS 4 grade but were better insulated against high prices. Non- tyre users faced high prices and limited supplies.

The next production season of NR will commence in end-October. Prices could rise till then. A price of Rs 70/kg could be the next benchmark to be breached.

Tapping wealth

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• Production of natural rubber has fallen by at least 30 per cent from last season's output due to heavy showers
• Supply of non-graded sheet rubber has been hit the hardest
• Stock position was 77,000 tonnes against 1,00,000 tonnes last year