Natural rubber prices hit record on supply crunch

The price of natural rubber (NR) today shot up to Rs 237 a kg due to serious supply crunch in the market. The price of benchmark grade RSS-4 may soon reach a new record of Rs 250 a kg, according to leading stockists here. Since the summer season is on the anvil, the production would fall in March-May, hence prices may rise further.

According to Kochi-based dealers, though the Rubber Board data projects a stock of 327,115 tonnes, the market is facing serious shortage even at very high prices. According to their estimates, the total stock in the country might be below 100,000 tonnes.

“If the market is having a stock of more than 300,000 tonnes, prices would not have increased to the current level. Traders all over Kerala are trying very hard to get big quantity of rubber for supplying to leading tyre producers,” said a leading Kochi-based trader. So, the Rubber Board data on stock is simply inflated, he added.

Sources at the Automotive Tyre Manufacturers Association (Atma) said the figure given by the board is exaggerated by 50-60 per cent as the local supply was low in recent times. He told Business Standard that while the stock in all leading rubber producing countries is decreasing, it is increasing sharply in India every month.

If the board’s estimates are correct the country is having a stock of 38.5 per cent of its total annual production. Even if the carryover stock and imports are added, this is a misleading figure which may influence government decisions, he added.

Meanwhile, shortage of labourers has affected tapping of rubber trees in many places. A large number of plantations, even small and medium sizes, are now engaging workers from outside Kerala to tap plantations. But their inexperience is a concern as tapping needs skill that can be evolved through years of experience. Wrong way of tapping would affect the production of latex and health of the trees.

The global market is also appreciating and Bangkok market today quoted Rs 288 a kg for RSS-4 variety. The rubber production across the globe would be low in most of the producing countries during summer season. So, market sources foresee further increase in prices during the next two-three months as the demand is increasing sharply.

In January, the total production was 98,800 tonnes, which is expected to fall below 70,000 tonnes this month and for the next three months production might be 50,000-60,000 tonnes.