Rubber hits Rs 84 for first time as global prices rise

Natural rubber prices have once again reached an all-time high with the benchmark grade RSS-4 quoting Rs 84 a kg here today, 50 paise higher than yesterday's close.

Among other grades, both RSS-5 and ISNR-20 (crumb rubber) quoted Rs 83 each, with RSS-5 gaining Re 1. On an average, prices of all grades have improved by Re 1 a kg.

Prices have been showing an upward trend primarily on account of higher quotations in global markets and shortage of supply in the domestic markets especially in Kerala.

RSS-3 grade had been peaked to 247 yen, a kg (around Rs 92) for April delivery on the Tocom futures at the Tokyo Commodity Exchange. The May contract has edged up to 251 yen, the June contract to 254 yen and the July contract to 257 yen today showing an average increase of 5 yen across the contracts.

The high summer heat has led to a shortage of supply to the domestic markets, say traders. Tapping of rubber trees has been stalled in most of the producing centres and production has dropped by around 50 per cent over the peak production period in October-December.

According to traders, total production in March would be around 40,000 tonne. However, a section of growers believe it would be not touch that figure.

Sources in the Rubber Board, however, have put the total production figure at around 42,000 tonne.

On February 7 prices had peaked to Rs 82.50 a kg, but slipped soon after due to heavy summer showers and a set back on the price front at the Tocom and in Bangkok. The price of RSS-4 had decreased to Rs 77.50 by the second week of March, but climbed again due to changed market parameters across the world.

N Radhakrishnan, vice-president, India Rubber Dealers Federation, told Business Standard that the market is facing acute shortage of quality sheet rubber and industrial users had slowed down purchase owing to sharp increase in prices.