Global natural rubber price dips below Rs 120 per kg

Global rubber prices once gain dropped below Rs 120 as Bangkok market today recorded Rs 119/Kg for RSS-3 grade. The price, though on a lower strata, was moving above Rs 120 for the last week and on Monday it quoted Rs 121.

Standard Malaysian Rubber (SMR-20) today dropped to Rs 100/Kg from Rs 101 recorded on Monday. SMR -20 is being imported to India on a large scale as the price is rather attractive, but almost equal with Indian bench mark grade RSS-4 in quality.

So the sharp fall in the international prices of natural rubber will pave the way for more imports in this financial year.

The Bangkok market had seen a sharp fall in prices in the first week of June and the price of RSS-3 dropped to Rs 119 on 2nd of June. But it improved slowly and peaked to Rs 130 on 24th June. The latest fall is because of reports on piling up of stock in China, world’s largest consumer.

Yet the Indian market is still on a higher plane as RSS-4 grade today quoted Rs 143/Kg. The much higher local market will also attract more imports to the country, according to experts.

Combined import in April and May of this fiscal increased 80% 63,559 tones as against 35,344 tones in the same period of last year. The price advantage prevailed in the overseas markets was the main reason for this whopping increase.

Tokyo rubber futures sank to their lowest in nearly three weeks today as lingering concerns over high inventory. In the Shanghai futures exchange for September delivery slipped 720 yuan to finish at 14,000 yuan ($2,300) per tone.

It briefly touched 13,980 yuan, the lowest in about a month, towards the end of trade. The contract on Singapore’s SICOM exchange for August delivery was down by 6.7 cents/Kg.

Acording to experts, the global rubber market is expected to remain in surplus for another three years causing gluts of roughly 652,000 tones, 483,000 tones and 316,000 tones in 2014, 2015 and 2016, respectively.

Additionally, China is expected to register a gross domestic product growth rate of 7.5% in 2014, which is the slowest since 2002. This slowdown means a slowdown in rubber demand also – as China is the world’s biggest rubber consumer – hence casting a shadow on the price.

The Wall Street Journal, reported that Thailand, the world’s largest natural rubber producer, would start unloading its rubber stockpile estimated at 220,000 tonnes, leading to further pressure on prices.

The article also said that the stockpiles in major rubber consumers like China and Japan were also at high levels. Hence the global market parameters indicate a lower price regime in the rubber mart for the rest of this year.