The devastating earthquake in Japan generated a wave of panic not only among rubber investors in Japan, but also in India. Indian investors rushed to square-off their positions in rubber, bringing down the price by three per cent in intraday trades on the National Multi-Commodity Exchange (NMCE) today.
Taking a cue from weakness in Japanese commodity markets, Indian rubber prices dipped Rs 890 a kg in intraday trade on NMCE. The Indian rubber market, which takes price guidance from rubber trades in Japan-based Tokyo Commodity Exchange (TOCOM), saw heavy selling after prices started sliding on the Japanese exchange.
The April contract on TOCOM, the second largest commodity exchange for rubber trading in the world, fell from Yen 410 a kg in early trades to Yen 396 a kg, a fall of Yen 14 in the afternoon trades, indicating one of the steepest falls in the recent past. On NMCE, the last traded price of the April rubber contract stood at Rs 21,409 a kg today, as against the previous closing of Rs 22,301 a kg.
Anil Mishra, managing director, NMCE, said, “Since the Indian rubber markets get price signals from TOCOM, prices in India have collapsed three per cent in the afternoon today. This situation may not be limited to a specific commodity, but the panic may also be seen in other markets.”
Adding: “A crisis like an earthquake affect more on the financial liquidity of the system. Therefore, people run for financial safety and start exiting from the financial markets, like the commodity market. The earthquake, thereafter, generated panic among investors, which pulled down the prices of rubber significantly,” Mishra added.
According to the data provided by the director general of foreign trade, India imported rubber and rubber articles worth Rs 777.32 crore in 2009-10 compared to Rs 499.11 crore in 2008-09, an increase of 55.74 per cent. On the other hand, export of rubber and rubber articles to Japan was marginal at Rs 25.61 crore in 2009-10.
