The Hindu Business Line : `Rubber price fall temporary'

THE steep fall witnessed in the price of natural rubber during last week may well be a temporary trend as rubber exports are set to pick up in the coming days, stabilising the domestic prices, industry officials have said.

"Prices might fall below Rs 50 (a kg), but it should bounce back," said Prof K.K. Abraham, President of the Pala Marketing Co-operative Society.

Rubber prices are currently showing a downward trend. The RSS 4 grade quoted Rs 50.50 a kg on Saturday at the Kottayam market, down from Rs 55 a kg on September 1. Rubber prices had surged in the previous months and touched a high of Rs 67.50 a kg in mid July.

Prof Abraham pointed out that rubber exports are set to increase by the end of this month since the peak tapping season in major rubber producing countries such as Thailand and Malaysia are getting over.

On the other hand, the tapping season in Kerala, which accounts for over 90 per cent of the country's natural rubber production, peaks during September-January, taking advantage of the favourable climate in the months.

"If prices keep ruling below the Rs 50-mark, exports will actually become viable even without the (export) subsidy. Since there is already a price difference of about Rs 7 between the international and Indian prices, the attraction to export will only go up," he said.

This will ensure that stocks will not build up in the domestic market and push prices further down.

He said there is strong demand for Indian rubber from countries such as China in view of the lower prices. Any further widening of price gap will only add to the attraction for Indian rubber in the international market.

"I think by November itself we will export the 50,000 tonnes for which the subsidy is applicable," Prof Abraham said. Unless international prices fall sharply, there is not much room for panic among the growers.

Tyre industry sources say that one reason why the companies stay away from the market is that perhaps they bought large quantities after the truckers' strike was withdrawn.

Rubber was also available in plenty in the market as growers tended to dispose of their stock in view of the onset of the peak tapping season.

However, some quarters are worried that prices could fall further if stocks build up in the coming months. "Huge production is going to take place. During October to December, production will be 80,000 to 90,000 tonnes a month. While domestic consumption would be only 60,000 to 62,000 tonnes," said Mr N. Radhakrishnan, President of the Cochin Rubber Merchants Association.

He said a great deal of price stability would hinge on the exports in these months.