Natural rubber price drops below the global tag

Benchmark RSS-4 grade today quoted Rs 152, while Bankok market quoted Rs 154 per kg

The local natural rubber price dropped below the global tag on Monday after six months. While the benchmark RSS-4 grade was Rs 152 a kg in the local market, it was Rs 158 a kg in Bangkok.  Local prices had touched Rs 168 in May.
Thereafter, the domestic market was ruling higher than the international one, with the gap widening to Rs 15-17 a kg. This triggered an increase in imports.

However, local prices have been dropping over the past couple of months due to an increase in supply and a drop in demand. This is also the best production season of the year. This will further boost supply in markets such as Kottayam and Kochi.

Experts said the trend was likely to continue till January-end. They said global prices were also dropping because demand was weak, specially in China, the largest consumer. Some traders expect the price to drop to Rs 130 a kg by December-end.

In anticipation of a price crash, there is strong selling pressure in most production centres.

N Radhakrishnan, a dealer and former president of Cochin Rubber Merchants Association, said the global trend was reflecting in the local markets. He added the market could not be salvaged through artificial measures.

Meanwhile, imports are expected to drop. These had recorded an all-time high during April-October at 214,448 tonnes compared with 131,107 tonnes a year ago.

However, imports may still be advantageous for tyre manufacturers because the Standard Malaysian Rubber is available at lower tags.

 

Therefore, how import goes in the coming weeks will be critical for the local natural rubber market.