Natural rubber prices double in a year

The natural rubber (NR) prices have almost doubled in a year. The benchmark grade RSS-4 variety was quoted at Rs 128 a kg on Thursday compared with Rs 65 a kg on same day last year.

The rubber market is now poised to break all records despite good production this season. The local market follows its global peers resulting in a sharp increase in the prices in the futures trading.

The local market quoted Rs 76.5 a kg for RSS-4 on December 3, 2006 and Rs 92 a kg on the same day in 2007. Thursday’s price is one of the highest prices quoted, the highest price quoted was Rs 142 a kg on August 30, 2008.

A section of traders believe that the market may breach this record because of the rising demand, especially from the tyre manufacturing sector. This price rise in abnormal as the supply had improved in November.

According to Rubber Board estimates, production in November increased to 103,000 tonnes compared with 95,550 tonnes in the same month last year. Production is expected to be at its peak in this month due to the winter season and supply is expected to improve further. The board estimates also revealed that the total stock in the country increased to 247,000 tonnes. This is due to the sharp increase in imports and a drop in exports during April-November.

Experts said a strong appreciation in prices in all major global markets would make the domestic market bullish. Heavy rainfall and floods had affected production in Thailand and Indonesia, hence global prices were on a rise. Also, aggressive buying by China made the market a seller’s paradise, they said.

Meanwhile, the cumulative production in April-November registered a fall of 6.5 per cent at 538,000 tonnes. This was 576,000 tonnes in the same period of last financial year. Consumption increased by 3.5 per cent at 615,000 tonnes.