The Hindu Business Line : Rubber unlikely to rise further

RUBBER prices in the domestic market, ruling at high levels, may not rise any further, in spite of intermittent heavy rains and impending monsoons, experts have said.

"There won't be any more increase. In fact, prices would have come down but for the present showers," said Mr Mohammad, a dealer. "If the rain stops for a few days, growers would start tapping and I actually expect prices to come down a bit."

The RSS four-grade rubber closed at Rs 59 a kg, while the RSS five grade closed at Rs 57.75 on Friday.Rubber prices tend to go up during rainy season because showers affect tapping. Though growers use rain-guards, they may not be effective in heavy rains. Kerala is experiencing heavy rains these days, well ahead of the arrival of monsoon in June.

Tyre manufacturers, the largest consumers of rubber, are staying away from procuring more as most of them have stocked up the commodity for the next couple of months' production.

"Major companies are not really keen on procurement. They are buying only if they get rubber at the prices they quote," the dealer said.

Another dealer pointed out that tyre makers were going in for imports in view of the competitive prices in the international markets. They are likely to import about 25,000 tonnes during the first half of the fiscal. As compared to prices here, RSS four grade closed at Rs 63.54 in Bangkok.

Prices are ruling firm in the domestic market mainly because of limited stock with some dealers, he said.

"Yes, buying has come down a bit. Companies are not going to run to the market to complete the requirement (for the year), " confirmed Mr D. Ravindran, Director- General of Automotive Tyre Manufacturers' Association (ATMA).

He said tyre makers were going in for imports. During April-August, imports of rubber would be 26,500 tonnes as against 18,000 tonnes in the same period a year ago, Mr Ravindran said

The current level of rubber prices, coupled with taxes and a cess, made imports of rubber an economical option for tyre makers, he said.

ATMA also doesn't expect rubber prices to rise. "Production is better and consumption is the same as in last year," Mr Ravindran said.