The Hindu Business Line : Views vary on recovery in rubber prices

Chennai March 8 Rubber prices, which have declined to below Rs 90 a kg, could improve if large-scale exports take place, according to a section of the trade. However, grower-sources feel things could improve in the next few months with summer fast approaching and lean tapping season round the corner.

Thursday's recovery in global prices has come in as some sort of comfort for growers.

May cast pressure

"The carryover stocks as on March 31 could be around 1.5 lakh tonnes, the highest in the last five years. This is certain to cast pressure on rubber prices," said Mr N. Radhakrishnan of Cochin Rubber Traders Association.

Output, exports

According to him, natural rubber production till January for the current fiscal was 7.59 lakh tonnes. Output during February-March is expected to be around 1.05 lakh tonnes, taking it to a record 8.64 lakh tonnes. With import also set to be a record 80,000 tonnes, the total availability would be 9.44 lakh tonnes. Against this, consumption is expected to be 8.24 lakh tonnes and exports would be around 53,000 tonnes.

"That leaves a surplus of 67,000 tonnes. Now, we have to add last year's carryover stock of 83,000 tonnes, thus resulting in a total of 1.5 lakh tonnes," Mr Radhakrishnan said.

`Speculation'

But Prof K.K. Abraham, President of the Pala Cooperative Society, said: "The stock projected could be more of speculation that actual."

He said prices had crashed in the last 10 days more due to panic sales.

On Wednesday, prices for RSS-4 were quoted at Rs 87 a kg.

According to Prof Abraham, one of the reasons for panic sales was the crash in futures market, especially on March 5. "Prices declined by nine per cent that day to Rs 85 a kg. People have built up positions for March futures," he said.

"We have taken up the issue with the Centre on the crash in the futures market. Rubber trade is a business done with hardly 1-2 per cent margin. If prices are to fluctuate so wildly, it will result in severe loss," Mr Radhakrishnan said.

Against the current domestic prices, global prices are Rs 97-98 a kg. "Despite lower domestic prices, we are not getting orders. Buyers are not coming forward in view of wide fluctuations. Also, China is not in the market and tyre manufacturers are keeping off. Unless, we export in large quantities, prices will crash," Mr Radhakrishnan said.

Prospects

But Prof Abraham said things could look up after the March contracts close next Wednesday. "For exports, the situation has to clear up," he said.

Tyre industry sources said prospects of prices rising beyond Rs 90 a kg were bright.