The Hindu Business Line : Drastic fall in rubber prices unlikely

AFTER showing upward trends last month, natural rubber prices have begun to decline, albeit marginally, but industry experts say there is no room for a drastic fall.

Since the beginning of January, the RSS (ribbed smoked sheet) four grade has dropped to Rs 52.50 a kg from Rs 54.75 a kg. This tendency is in line with the international rubber prices, which are currently ruling lower than the domestic rates, said Prof. K.K. Abraham, President of the Pala Marketing Co-operative Society.

Price of the RSS-3 grade, comparable with the RSS-4 grade, is hovering around Rs 51.50 a kg in the international markets.

"There is now a slight dip only. It is natural in this period," Prof Abraham said. He said it was unlikely that prices would fall drastically in the coming days. "A price crash is not possible."

Mr N. Radhakrishnan, President of the Cochin Rubber Merchants Association, said farmers who had stacked their produce in the previous months have now started to sell. "They are now selling since prices are falling in the international markets and on rumours of more rubber imports coming," he said.

The farmers resorted to hoarding of rubber sheets hoping that prices would further rise in January as the peak tapping season is coming to a close. Rubber tapping in Kerala slows down by end-January and peters out during February because of the prevailing climatic conditions in the State.

"Talks of more rubber imports coming into the country and lower prices in the futures markets are driving farmers to sell off their stocks," he said. According to Prof Abraham, tyre companies are now actively buying from the domestic market as prices are falling.

However, if prices were to drop any further, exports might pick up again, he said. On the other hand, if prices rise because of the lean tapping season, tyre makers and other consumers would be enthused to go for imports. So prices are likely to rule steady in the coming days.

"Prices may not vary much in the coming days. I think the price would be around Rs 50 a kg, and changes may be just around 5-6 per cent on the higher or lower side," Mr Radhakrishnan said.

Exports come to a standstill

WITH the restrictions on export subsidies in place, natural rubber exports from the country has come to a standstill.

"Exports have completely stopped," said Prof. K.K. Abraham, President of the Pala Marketing Co-operative Society.

The Government stipulated that only 34,000 tonnes of rubber exports would be entitled for the subsidy. Of this, the subsidy is applicable to only 15,000 tonnes of sheet rubber and 6,000 tonnes of latex.

"We have touched the ceiling for sheet rubber and latex. In the case of TSR (technically specified rubber), 5,000 tonnes more can be exported with subsidy, out of the 13,000 tonne quota," he said.

Exports of natural rubber in the first six months of 2004-05 fell by 34 per cent to 13,243 tonnes from 20,026 tonnes in the same period a year ago. For the full year, exports are likely to be lower than 50,000 tonnes, compared with 76,000 tonnes last year.

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