The Hindu Business Line : Rubber stocks may fall below 70,000 t

Last year, consuming industries pressed the panic button when the stock position fell to 66,0000-70,000 tonnes in the first quarter, the lowest level in nine years.

Prices skyrocketed and the Rubber Board called a meeting of all stakeholders of the trade in June 2004.

While a section of the rubber trade does not expect prices to surge this year since production will begin to peak from August, others say that a repeat of last year's price flare-up is possible. As per the estimates of the Rubber Board, production in the first three months of the fiscal is 1,49,500 tonnes and imports were 21,819 tonnes.

The opening stock of the year was 1,07,000 tonnes.

Consumption during the quarter was an estimated 1,94,560 tonnes and exports 1,220 tonnes. This leaves an outstanding stock of 82,539 tonnes at the beginning of this month.

The production in July at best is expected to be only around 50,000 tonnes, as heavy rains could affect tapping during the month.

Given the higher international prices, the scope for imports is minimal, while prospects of exports have brightened.

Even if one expects an import of 5,000 tonnes in July, and factor in 3,000 tonnes as exports, the stock at the end of the month could be around 68,000 tonnes. (India's monthly average consumption of rubber is 66,000 tonnes).

"Who has got how much of that stock will be the critical factor on deciding the price aspect," a trader said.

He said going by the trends, about 20,000 tonnes in that stock might be in the form of latex and block rubber, and the balance would be sheet rubber.

"I would put only about 20,000 at the hands of the consumers by then," he said, adding that the situation could be telling on the prices since international rates are already ruling higher than the local prices.

However, some experts are of the view that the stock position may not influence the prices much, as the peak tapping season would begin from August, taking advantage of the clear weather.

"August onwards our monthly production would match consumption," said Mr N. Radhakrishnan of the Cochin Rubber Merchants Association.

He said the stock position's impact on prices could already be felt in the market as prices are hovering around Rs 63-64 a kg, which is not significantly lower than last year's high rate of Rs 67.50 a kg, recorded in July.

Our Correspondent reports from Kottayam: Reacting to the series of blasts in London, the domestic spot rubber prices declined sharply recording all-round losses on Friday.

A crash in major international rubber futures markets accelerated the downtrend and sheet rubber RSS 4 fell to Rs 62.50 a kg in the morning session. The grade later recovered partially to Rs 63.50 against Rs 64.50 a kg on Thursday.

Though the strong buyer resistance continued to put immense pressure on prices, the absence of quantum sellers triggered short covering and fresh buying at lower levels rescuing the market from further fall.

The futures recovered moderately as the market lost heavily towards Thursday closing. The July contract was traded at Rs 63.75 (62.84), August Rs 64.40 (63.95), September Rs 61.75 (60.77) and October contract at Rs 59.60 (59.08) per kg for RSS 4.

The transactions were better at 2565 lots till noon recording 317 lots in July, 1918 lots in August, 271 lots in September and 59 lots in October.

Spot prices were as follows: RSS-4: 63.50 (64.50); RSS-5: 62 (62.50); ungraded: 59 (59.50); ISNR 20: 58 (59) and latex 60 per cent: 41 (41.50).

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