Crisis-ridden economy causes fall in rubber price

Monthly output in July dropped 32.4% to 46,000 tonnes against 68,000 tonnes in July last year

The prevailing economic crisis has hit the local natural rubber (NR) market as the price of the benchmark grade, RSS-4,  dropped to Rs 186 a kg on Tuesday.

According to leading stockists here, the market would be  dull for the next three-four days as rubber-based sectors, especially the non-tyre segment, are facing a serious crisis. Advent of cheap imported goods and higher input costs had left the non-tyre small and medium enterprises in rough weather. The tyre industry is also facing crisis as the offtake from the auto sector has scaled down to a great extend. This has slowed the demand for NR, though production is down in July and August.

On August 14 (Wednesday), RSS-4 quoted Rs 194 a kg, but this went down to Rs 191 on Friday and to Rs 188 on Saturday. The Bangkok market, which quoted Rs 162 a kg on Tuesday, was on a low level of Rs 149 on August 6.

On July 30, the Bangkok market went down to Rs 147, the lowest in recent weeks, but started an upward trend from August 1 onwards. The local market was on a bull mode till August 14 as heavy rain in Kerala affected rubber production.

Monthly output in July dropped 32.4 per cent to 46,000 tonnes against 68,000 tonnes in July last year, according to Rubber Board data. This is the sharpest fall in monthly production during the last four years. This also caused a fall of 18.6 per cent in the cumulative output during the April-July period of the current financial year. The April-July figure stood at 196,000 tonnes against 240,700 tonnes in the corresponding period last year.

Meanwhile, consumption increased marginally 0.6 per cent in July. During the month, 82,500 tonnes, were consumed against 82,000 tonnes a year earlier. Cumulative consumption in April-July dropped to 330,480 tonnes against 337,080 tonnes in the year-ago period, recording a two per cent drop.

As the global prices are getting better, the Thai government announced it had no plans to resume the market intervention scheme to buy rubber directly from farmers to shore up prices. A price slump led the Thai government to run a scheme from October 2012 to May this year under which it bought rubber at higher-than-market prices from farmers.