Natural rubber price fails to pick up despite shortage

Spot rubber prices continue to play between the price band of Rs 135 to Rs 137 per kg, even though it is the end of peak season and the stock arrivals to the market are at their lowest level. Four weeks ago, the price had been rolling within the same range.

“As mercury is surging in the plantations, latex yield is falling,” said Josekutty Antony, president, Rubber Nursery Owners Association to Financial Express. “Usually, in the end of the peak season, as the latex flow becomes a trickle, the spot rubber price goes up. This has not happened this time,” he said.

Planters were expecting that the price would touch Rs 150 per kg by February-end, as predicted earlier by market analysts. A worse blow for natural rubber (NR) planters has been the price fall trend in rubber futures. Indian Commodity Exchange’s March contract of NR touched a low of Rs 13,340 per 100 kg. And March contract is the most active among rubber contracts.

The low prices do not excite the tyre industry, the main buyer. Even the shortage in this key raw material is not so much frightening because, “the offtake for NR has been low this year, in view of auto and economic slowdown,” according to Rajiv Budhraja, director general, ATMA (Automotive Tyre Manufacturers Association).

“The peak NR season seems to have compressed this year by one month on each side. Instead of September, it gathered pace only in October. Although February is yet to end, we already feel the tightness in NR availability,” Budhraja told Financial Express.

With only two-thirds of the Indian rubber plantations actively tapped, there is a 35 per cent supply crunch in the domestic sector. The shortage was over 40 per cent earlier. In the end of 2019, Rubber Board had trimmed its production, consumption and import targets for NR in the current fiscal year, factoring in the changes in global and domestic economy.

The projection for production in 2019-20 was revised to 730,000 tonnes. This was about 20,000 tonnes lower than the earlier target. In tune with it, the consumption target has also been rolled back from 1,270,000 tonnes to 1,140,000 tonnes.

Shekhar Ghosh is a communications consultant and and former journalist, who has edited and written for publications such as like Business India, Business Standard, Business Today and Outlook.

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