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Rubber prices may rule firm despite slight fall

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(From left) Mr S.M. Desalphine, Chairman, Rubber Board, Mr Kailash Singh, Managing Director, Teflas Conference and Events, and Dr B.C. Sekhar, a rubber expert, at the inaugural function of World Rubber Congress at Kochi on Thursday. — K.K. Mustafah

Kochi , June 17

NATURAL rubber prices are likely to rule firm this year, though they may decline to Rs 57-59 a kg level (for RSS-4) in the next couple of months.

``The prices are expected to be volatile this year. Though prices may come down in the near-term, they could touch the Rs 67-70 a kg band going by the technicals, Mr Nagaraj Meda, Managing Director, Transgraph Consulting, said. Mr Meda, a technical analyst, was addressing the World Rubber Congress 2004 here.

Once the prices touch the Rs 70 a kg-level, there are chances of a long bearish phase, he said.

Mr Meda said the demand-supply situation of natural rubber was different in the country from the global one. While a supply gap was projected in India, a surplus was expected in the global market. ``It will be one reason why domestic prices will be higher than global prices,'' he said.

On Thursday, RSS-4 was quoted at Rs 65 a kg. Domestic prices have shot up in the last couple of weeks on arrival shortage arising out of heavy rains in the tapping areas.

According to Mr S.M. Desalphine, Chairman, Rubber Board, the uptrend in the market has been mainly due to international trend. However, domestic factors such ``as seasonal supply shortage'' also contributed to the rise. During the first half of this month, average price of RSS-4 increased to Rs 60.45 a kg from Rs 58.55 in May and Rs 57.85 in April.

He also told the congress that stock build-up by global buyers was also a reason for the rise in prices and the situation would have to be watched once the build-up was over.

Dr A.K. Krishnakumar, Rubber Production Commissioner, in his address, said the contribution of area to rubber production in the country was declining but there was scope to bring an additional 1.2 million hectares under the commodity.

Mr N. Radhakrishnan, President, Cochin Rubber Merchants Association, said as arrivals had been hit by monsoon, rubber was practically unavailable for trading. ``According to estimates, only 62,000 tonnes of rubber is available now in the country. Of this, 30,000 tonnes is with the industry and rest in Kerala. The stocks are available mainly in RSS-4 form and other grades are not available. Therefore, we are unable to meet the demand of the small-scale sector especially,'' he said.

Mr T. Vidyasagar of Comex said if one was to go by the trend in futures, then prices could slip to Rs 62 a kg in July and Rs 57 in September. He, however, regretted that the user industry was not taking part in rubber futures trade.

Earlier during the inaugural function, Prof K.K. Abraham, President, RubberMark, urged the Centre to take a decision on extending subsidy for rubber exports soon.

``There is stiff opposition to the subsidy and this is to make Indian a non-entity in the global market. But the Centre must provide financial assistance for exports for at least five years to establish the country as a reliable source of rubber,'' he said.

Dr B.C Sekhar, an international rubber market expert, said natural rubber faced no danger from synthetic rubber as long as the prices did not breach the Rs 90-100 a kg band. ``Once the price breaches the market, then synthetic rubber becoming a viable option arises,'' he said.

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