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Tuesday, Jun 18, 2002

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Rubber shortage hits goods making units

Our Bureau

KOLKATA, June 17

THE rubber goods manufacturing sector, dominated by the small and medium units, seems to have run into serious trouble over the availability of natural rubber, especially the widely used RSS-4 grade. There are some 6,000 SSI units all over the country, manufacturing rubber goods, and the market supplies suddenly seem to have shrunk.

Talking to Business Line today from his office in Mumbai, Mr M.F. Vohra, managing partner of Zenith Rubber and Chairman of Capexil (which has rubber as an important item in its export basket), said the commodity had suddenly become scarce even as the prices of natural rubber at Kottayam on Monday had reportedly touched a high of Rs 42 per kg, well over the benchmark price of Rs 35.

He said the domestic prices of natural rubber had shot up despite proclaimed carryover stocks of 2,47,000 tonnes, out of a total annual production of around 6,50,00 tonnes. The domestic prices in February/March, he informed, were prevailing around the Rs 28 per kg level. The international price, according to him, was still ruling at $750 per tonne, which worked out to around Rs 35-36 per kg. His logic was that if stocks were aplenty, the prices could not shoot up like this all of a sudden.

Suggesting that the domestic rubber goods sector, including the tyre manufacturers, was "being held to ransom'', Mr Vohra said some of the export-oriented units had not been able to get even 9-10 tonnes of RSS-4 grade for the past three days, as market supplies suddenly seemed to have dried up.

Since duty-free imports of natural rubber under advance licence were banned, and general imports were allowed only through the two designated ports of Visakhapatnam and Kolkata, the problem suddenly seemed to have become acute, he said.

While no imports had taken place through Visakhapatnam, only some small quantities were being brought in through the Kolkata port, he clarified.

He said both AIRIA (All India Rubber Industries Association) and ATMA (Association of Tyre Manufacturers Association) would be sending representations to the Union Minister of Commerce and Industry, Mr Murasoli Maran, urging him to look into this sudden shortage of natural rubber in the market.

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