The Automotive Tyre Manufacturers Association (Atma) intends to persist with its charge of manipulation of natural rubber prices on the Ahmedabad-based National Multi Commodity Exchange (NMCE).
The Forward Markets Commission (FMC), the commodity markets regulator, has declined an Atma request to intervene. However, Atma plans to write again to FMC and NMCE in coming days, reiterating its point on the need for a reduction in the daily price band of the NMCE.
“We have evidence for the price manipulation of natural rubber on the NMCE, which we are submitting to the FMC on (next) Monday or Tuesday,” said Atma director-general, Rajiv Budhraja.
Since the launch of rubber futures on the NMCE in 2003, the Delhi-headquartered Atma holds the exchange responsible for the price rise in natural rubber, the only raw material for tyre making. The claim was rejected each time it was raised, with the argument that the price movement was based on basic demand and supply.
Atma had, in the second fortnight of October, urged FMC to reduce the daily price band from the existing four per cent to one per cent. Terming the commodity derivatives exchange a place for speculative and manipulative trading, Atma had also urged the regulator to suspend trading in natural rubber.
The FMC had, on October 21, asked NMCE to clarify its stand and justify the price movement in natural rubber. The exchange did so on October 23. FMS told Atma last week, “The internal investigation found no clue leading to price rigging on NMCE. Hence, no action is required against the exchange in any form.” A renewed complaint was again rejected, with FMC saying, “A four per cent price band is in line with other agri commodities, plantation products and, most importantly, global markets.”
“You cannot give a too-wide or too-narrow price band to market participants,” an industry official said. Meanwhile, with a 10 per cent decline in production due to unseasonal rainfall, the price of natural rubber has risen to Rs 200 per kg (of the benchmark RSS-4), more than double the level in November last year. Usually, the price declines in November, as this is the time of peak production in Kerala, the major supplier.
Output this November is estimated at 82,000 tonnes as compared to 92,500 tonnes in the corresponding month last year. Apart from this, labour shortage is a serious issue in most plantations, even at high wages.
