Rubber price spike catches tyre makers on the wrong foot

Industries that use natural rubber are facing the prospects of a sharp rise in prices which is not in line with forecasts made by experts and industrIes that use natural rubber. The benchmark RSS-4 sheet rubber today quoted at Rs 74-75 a kg, rendering a serious blow to industries who had projected the prices to dip below Rs 50.

They feel they missed the opportunity to stock the commodity at the lower rates. As the price dropped below Rs 60, farmers were reluctant to sell their produce and built up a strong resistance against the well-orchestrated efforts to sabotage the price line. Though spot market was talking of further fall in the rubber prices, futures were not reflecting that and ultimately prices recovered. Farmers were also taking cues from futures and resisted selling at lower levels.

To aggravate the free fall of prices during the last few weeks, industrial users, especially tyre manufacturers withdrawn from the market. But once txhey came back to the market, they are not in a position to mobilise the required rubber due to resistance from farmers.

Farmers are reluctant to release rubber below Rs 65 and hence the recent recovery in prices.

A slight improvement in crude oil prices also brought in confidence in the producing areas and helped the market improve by Rs 15 per kg. According to growers, a price band below Rs 70-75 is not viable to the producers as the increase in wages and other expenses have made rubber tapping unviable. This made the growers to hold on their produce for some weeks and this led to the current upswing in the prices.