The gap between global and Indian prices of natural rubber widened further as the Indian counters are now far behind the international benchmark. The local RSS-4 on Thursday quoted at Rs 163 a kg, compared to its counter grade in Bangkok at Rs 185. This shift in the market is a new trend, as local prices were much higher over the last seven to eight months.
The trend reversal may badly hit imports as the price of Standard Malaysian Rubber (SMR-20) rules above that of RSS-4 grade in India. In Bangkok, SMR-20 quoted at Rs 168 a kg on Thursday.
Local importers, including tyre companies, prefer the imported SMR-20 as it is almost similar in quality to the local benchmark RSS-4 grade, and comes at a lower price. This was a major reason for the sharp increase in imports in the current financial year, say local traders.
| RATECARD Price in Rs/kg | ||
| Date | Bangkok | Kochi/ Kottayam |
| June | 183 | 188 |
| July | 168 | 184 |
| August | 152 | 173 |
| September | 168 | 184 |
| October | 164 | 184 |
| November | 165 | 172 |
| December | 177 | 160 |
| Source: Rubber Board | ||
In recent weeks, natural rubber prices moved up by Rs 8 in the global markets . On December 28, 2012, it was quoted in the Bangkok market at Rs 177 a kg, up from Rs 165 a kg in November. In the local market of Kottayam, the price was Rs 175 in November, compared to Rs 185 in October 2012.
Till November 2012, prices in international markets were Rs 15-18 lower than in the Kochi and Kottayam markets. This benefited the rubber-based industries, which opted for the duty-free channel for imports. During that period, SMR-20 grade was traded in the range of Rs 150-155 a kg, which attracted heavy imports. During the April-November period of the current financial year, about 153,855 tonnes (an all-time high) were brought into the country, compared with 115,885 tonnes during the corresponding period of FY12, registering a growth of 32.76 per cent. In November alone, 22,748 tonnes were imported against 16,125 tonnes in the corresponding month of the previous year. According to earlier projections, the current financial year may see the highest imports at over 250,000 tonnes . But the current price trends negate this as imports might slow down in the January-March period.
According to N Radhakrishnan, former president of Cochin Rubber Merchants Association, excess supply in the local markets is the main reason for the sharp fall in domestic prices. The local rubber-based industry now has healthy inventory levels, thanks to huge imported volumes at a time of price advantage in the international markets. However, the local demand is rather slow now, affecting the price line badly. According to Radhakrishnan, production is healthy now on active tapping in most plantations in Kerala and Tamil Nadu. Being the peak tapping season, though the supply of rubber to the markets is on the rise, demand is not picking up.
Radhakrishnan told Business Standard that there was no change in the fundamentals of the commodity in the world markets, but the prices are ballooning because of the ‘price management’ in futures trading. There is no sign of improvement in demand across the globe, especially in China, the largest consumer of the raw material in the world. Also, normal production is reported in major producing countries, such as Thailand, Indonesia and Malaysia, he added.
