Traders rule out import of natural rubber to check prices

Natural rubber traders ruled out any possibility of resorting to imports in order to check soaring rubber prices in the local market as carryover stock was enough to fill in the demand-supply gap, they said.

Unexpected surge in demand is pushing rubber prices to record levels and speculation is rife that prices may even touch Rs 80.

Traders told Business Standard that there is a carryover stock of 1,07,000 tonne as on March 31, 2005. This can reduce the scope for imports.

They also said that the carryover stock will be around 1,00,000 tonne by the end of FY 2006-07. The area under cultivation of rubber will also increase and the gap between supply and demand will be closed by 2008-09, they said.

Natural rubber prices are low in the global market but trade experts said duty-bound exports might not be a viable option to import rubber as duty as the cost incurred thus would be higher than the local rubber prices.

But as local rubber prices increase further compared to the international rates, the case for imports is strengthened.

Natural rubber is all set to continue its bull-run as price of RSS 4 grade increased to Rs 62 per kg here today. Other grades of rubber also showed an upward movement.

Increased exports of rubber is the main reason for the drop in the stock, which is pushing prices ahead. During 2001-02 total carryover stock was around 1,93,070 tonne and in 2003-04, India exported 75,906 tonne rubber.

Consumption of NR is on the increase world over compared to synthetic rubber. This indicates a good time ahead for NR growers.

According to a Rubber Board study, the gap between supply and demand of natural rubber will be widened during the current fiscal and in the years ahead.

As per the Board's estimates, in the FY 05-06 total rubber production is expected to be 7,80,000 tonne and consumption around 7,92,000 tonne, leaving a deficit of 12,000 tonne.

In 2006 -07 the estimated production will be to the tune of 8,20,000 tonne and consumption, around 8,40,000 tonne. This will be a key factor in determining the price line of NR in future.