Rubber exports to slip

Country's natural rubber export has been seriously hit as domestic prices surged unexpectedly in recent weeks. Bank of Thailand's (BoT) recent decision to devalue the country's currency, baht, further worsens the situation.

During November, India exported only 797 tonne while total export in the same month last year was 12,440 tonne. Export was badly hit by higher domestic price, which was higher by Rs 12 per kg than the quotations of Thailand.

According to an expert of the Rubber Board, the depreciation in the value of baht might hit the Indian export badly as other nations like Indonesia and Malaysia would also be forced to devalue their currency in comparison with Thailand in order to compete on the export front. This may weaken India's slot in the global market, which has been on the rise for the last 2-3 years.

The recent decision of BoT would affect India badly as it was the main production season in the country, said N Radhakrishnan, Vice President, Indian Rubber Dealers Federation.

He added that the depreciation in value of baht would make Thailand the most attractive destination for import as that country produced the largest quantity in the world.

Besides, import of rubber to India will also register a steep rise. Total import had already touched 31,000 tonne and according to earlier estimates of the traders, it would cross 60,000 tonne by the end of March 2007.

But, with devaluation of baht, import of rubber to India will be cheap, thus, benefiting rubber-based industries especially the tyre industry.

Radhakrishnan said that the import might cross 65,000 tonne mark as all the global market parameters favour steep rise in imports. Rubber Board had earlier estimated import to the tune of 45,000 tonne for the whole of 2006-07.

Experts said that the rise in import and drop in export would be a serious concern as most of them expected a crash in prices due to a paradigm shift in global market.

As on today, RSS-4 grade of natural rubber was quoted at Rs 89 a Kg in Kochi market while Bangkok's opening quote was Rs 77.13.