Rubber board, traders at odds over stats

Total natural rubber production in India will increase by 4-5 per cent in the current fiscal to 780,000 tonne, according to Rubber Board's estimates.

Consumption will also increase at about the same rate and touch 792,000 tonne, though estimates of rubber traders differ slightly from that of the Rubber Board.

According to Cochin Rubber Merchants Association (CRMA) estimates, total production in 2005-06 will be 785,000 tonne and consumption will be slightly lower than the board's estimate. The board has estimated 60,000 tonne import, while traders peg the figure at 70,000 tonne for the current fiscal.

In case of exports, while theboard says it will be 40,000 tonne, CRMA has pegged it at about 25,000 tonne.

CRMA president N Radhakrishnan said 25,000 tonne export would be possible, keeping in mind the current level of difference prices between India and the global markets and if the gap widens further the scope will also increase. The major hurdle for exports is the shortage good quality sheet rubber in India.

In 2003-04, India exported 75,960 tonne rubber, the highest-ever figure and this was possible owing to export incentives provided by the board.

The main reason for the wild fluctuation in prices is the huge carryover stock in the market. Rubber production in India is actually at par with total consumption and any growth in production is lapped up by the industry.

But the increase in imports creates imbalance in stock levels, thereby upsetting prices. In 2002 -03, closing stock as on March 31, 2003 was 117,995 tonne compared with 77,293 tonne in 2004 and in 2005 this dropped to 77,293.

This caused prices to move upward. The trend is continuing though the stock position as on 31st March 2005 had increased to 106,200 tonne.

Traders told Business Standard that whenever the carryover stock increases beyond 150,000 tonne, the market faced a huge crash in prices. Rubber-consuming industries, especially tyre manufacturers, have been using import as a tool to regulate prices rather than to compete with global competition.

But the marked difference in prices (almost Rs 10/kg) between Indian and global prices closes the doors of duty-bound import and if India can export 65,000 - 75,000 tonne rubber it will be a boon to the growing sector and an impetus to increase production in the coming years.