Rubber Plumbs Depths, Touches Five-Year Low

Natural rubber prices have slid to a five-year low in India on weak sentiment and poor buying support but the Rubber Board is hopeful of a technical correction soon on a dip in production.

Rubber production has been lower this year than last year due to unfavourable weather conditions. We expect some correction in the prices in the near future, rubber production commissioner Krishna Kumar said telephonically from Kottayam.

Prices for the RSS-4 variety, mainly consumed by the industry, slid to Rs 2,525 a quintal, the lowest since 1993. Lot (ungraded) rubber also plunged to a five-year low of Rs 2,375. In 1993, RSS-4 ruled at Rs 2,546 and lot rubber at Rs 2,418.

However, the industry feels the situation could worsen further. Nothing can be done about plunging prices as there is no offtake from the industry, especially tyre units which have cut down production, an automotive tyre manufacturers association official said.

Krishna Kumar also agreed that consumption would have to improve. We will have to wait for the overall growth to improve, he said. He said the Rubber Board had initiated certain efforts to help boost the prices.

We have proposed to give an incentive of Rs 2,000 per tonne for exports of block (crumb) rubber and it has been approved by the board. This assistance is for packaging, incentive and freight, he said.

Moreover, there was a good export potential as global prices were Rs 500 a quintal higher than Indian prices. Something is being done on that front by the Rubber Co-operative Society and the Rubber Growers Co-operative Marketing Federation besides the Kerala government, the official said. The situation right now is that both ends are open with plenty of rubber available. The consumers are taking liberty, he added.