Rubber increases 8% in a month

Hits all-time high of Rs 85 a kg

Natural rubber hit a all-time high of Rs 85 a kg, up 50 paise over over Tuesday's close of Rs 84.50 a kg. Prices, which have been hovering around Rs 83.50-84 for the last few days, are now poised to touch Rs 90 soon, according to experts and traders here.

During the last month RSS-4 grade has appreciated by Rs 6 a kg, or 7.59 per cent over the Rs 79 quoted on March 11. Prices of other grades have also increased sharply on account of supply not being able to meet the demand of the market. Both RSS-5 grade and ISNR-20 are being traded at Rs 84, an increase of Re 1 over Monday's prices.

Price of latex scaled up to Rs 60 a kg and un-graded sheet fetched Rs 83 here today. High prices and the accompanying bullish outlook is making growers hold on to their stock, leading to the supply crunch.

Meanwhile, the global market also scaled new highs, which also influences the domestic market strongly. Tocom futures appreciated by 4.2 yen a kg and increased to 252.4 yen (Rs 94 approximately) on Tuesday.

Leading traders told Business Standard prices would continue to move upward, with RSS-4 likely to touch Rs 90 soon. A prominent trader said the extreme summer heat in producing areas, coupled with un-matched increase in demand has aggravated the supply crunch scenario in the last couple of weeks. Owing to the short supply, the industrial sector, both tyre and non-tyre, has not been able to maintain their stocks.

A market expert told Business Standard that tyre manufacturers currently a stock of hardly 30,000 tonne, while the non-tyre inventory is 10,000 tonne, which is considered low, as the automotive sector is very active and demand for tyres is consequently high. By April-end tyre grade rubber stock is expected to dip further by 10,000 tonne.