Rubber imports on the rise

Natural rubber (NR) import to the country has increased in the current financial year as import has become a viable option to the industry, traders and the Rubber Board said.

According to Rubber Board estimates, total import during the first seven months of this fiscal was 44,600 tonnes. The total import in 2003-04 was about 47,000 tonnes.

Traders here told Business Standard that imports could touch 60,000 tonnes by March 2005 as global prices were falling.

Average price for RSS 3 grade in the global market has dropped from Rs 58 to Rs 53 per kilogram in the recent months. In India the average price is Rs 50.50-51/kg.

The narrowing gap between Indian and International prices will lead to more imports, they added.

Export of NR has been affected by the changed export incentive policy of the government.

The Rubber Board has limited the incentive only to 34,000 tonnes though the target fixed is 50,000 tonne.

Exports are no longer very attractive to traders following reduction in the incentive.

Market sources said rubber stocks had piled and this would hurt prices further.

In 2002-03, the total stock in the market was about 1.75 lakh tonnes and the average price was below Rs 45.

In 2003-04 ,after the export of 74,000 tonnes the stock was around 65,000 tonnes.

This was a major reason for the rise in rubber prices by about Rs 15 per kilogram.

Traders said decline in exports and the rise of imports would lead to larger carry-forward stock, which would force down prices.

Increased production in the season would add to problems facing rubber growers, said traders.

Rubber production was estimated to be around 7,34,000 tonnes in 2004-05, higher by at least 5-6 per cent from the previous year.

In Tokyo, rubber futures edged down on Monday as the yen's strength induced profit-taking but the market was wary of selling heavily amid a dearth of new sell factors. May rubber contracts on the Tokyo Commodity Exchange (TOCOM) closed down 1.8 yen per kg at 125.1 yen. It had moved in a range of 124.1 to 125.8.

Other months closed down by 0.4-1.4 yen. The dollar was at around 102.28/32 yen.