• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Port Info

• Ships in Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• The Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Vipin V. Nair

Kochi , Aug 11

AFTER an unusual surge that pushed natural rubber prices to record highs a fortnight ago, the market is now witnessing a steep fall in prices, making rubber one of the season's most fluctuating commodities.

The benchmark Ribbed Smoked Sheet (RSS) - 4 grade touched Rs 70 a kg in the last week of July. But on Thursday, the same grade quoted Rs 61.50, ending the most lucrative period for the country's million-plus rubber growers.

Since January, natural rubber prices have swelled over 25 per cent, bettering last year's record high price of Rs 67.50 in July. The steep ascent of prices in the market was triggered by shortage of rubber in the market, due to monsoons hampering tapping, as well as by booming international prices.

However, the introduction of value-added tax (VAT) on rubber in Kerala, which produces over 90 per cent of the country's natural rubber, somewhat cushioned the impact of the price escalation on consumers, such as tyre makers. In Kerala, tax on rubber has come down to 4 per cent under VAT, from 12.65 per cent.

Rubber industry sources say the current fall in prices came about because of the perception in the market that availability of the commodity would improve as rains have receded.

"Prices tumbled down mainly on sentiments that more rubber would come into the market and not based on any fundamentals," they said, adding that the availability of rubber was still constrained.

Also, the fall in international rates also affected local prices. The RSS-3 grade crashed to $1.51 a kg in Bangkok from $1.80 two weeks ago.

Sensing the price drop, tyre companies, which consume 54 per cent of the country's 7.5 lakh tonnes of annual production, stayed away from the market or bought very small quantities. The lack of demand also accentuated the crash, industry sources said.

"Tyre companies are now buying only for their day-to-day requirement," a trader said. It is learnt that many traders have burnt their fingers in the present crash. "I haven't seen such a wild fluctuation since 1995," said one.

The industry is of the view that rubber prices may not rise dramatically in the coming days as onset of the peak tapping season is round the corner and it is only a matter of days before the arrivals improve.

"Even if prices tend to rise, they would not go beyond Rs 64 a kg," they said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
ICICI Bank sees big scope in rural credit

Copyright © 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line