Rise in natural rubber price puts SMEs in a tight spot

A sudden rise in the prices of natural rubber in the last few days combined with a tight squeeze in supplies has pushed the operations of SMEs in the rubber industry into a tight spot, according to the All India Rubber Industries Association (AIRIA) .

According to the Rubber Board, prices have jumped 7 per cent to Rs 192 per kg from Rs 179 a week ago. Currently, domestic prices are ruling 21 per cent  higher than the international prices. As against the domestic price of Rs 192 per kg, the international price is Rs 159 per kg. Interestingly, international prices have come down from Rs 168 per kg on June 28  to the current Rs 159 per kg.

"What is more worrisome is that even at these high prices the rubber is just not available," said AIRIA.

"This kind of a supply crunch when internationally natural rubber prices are falling has not been witnessed in a long time. We understand from the trade that due to daily escalating prices, growers are possibly holding the stock leading to nonavailability and further increase in prices," said Niraj Thakkar, president of AIRIA.

Two years ago around 500 units had shut operations when the price crossed Rs 200 per kg. The situation is almost similar and increase in prices of other raw materials like chemicals and escalation in transportation cost are adding to the woes of the SME sector.

"We have been able to procure only 40 per cent of our requirement of rubber in the last one month. While the Rubber Board had projected a production of 64,000 tonne in June, our interaction with dealers has revealed that approximately 30,000 tonne of it has been produced and released in the market. As a result, production schedules have been hampered," he added.

The industry is, therefore, reiterating its plea for duty-free import of natural rubber to the extent of domestic deficiency.

It has also expressed surprise over the approximately 300,000 tonne of ready stock of rubber in the country as suggested by the Rubber Board.

Since majority of the stock is with the growers and processors, the same should be released in the market to address this scarcity, stated AIRIA.