The Hindu Business Line : Block rubber shoots up as exports spurt

BLOCK rubber prices have shot up in an unprecedented manner to reach nearly on par with the RSS-4 grade as the sudden spurt in exports have led to its shortage in market.

"There is no ISNR-20 (the grade for block rubber) available in the market even at this unusually high prices. We fear that many exporters may not be able to deliver what they have contracted," Prof K.K. Abraham, President of the Pala Marketing Federation, said.

He said it is perhaps the first time the price difference between the RSS-4 grade and block rubber has narrowed down to this extent.

On Thursday, the ISNR-20 quoted at Rs 51 a kg, only 25 paise lower than that of the RSS-4 grade rubber.

Prior to this trend, the average price difference between block rubber and the RSS-4 grade was about Rs 2 per kg. During July, when RSS-4 grade touched Rs 68 a kg, the ISNR-20 was ruling at only Rs 58-59 a kg, Prof Abraham pointed out.

The price of block rubber or technically specified rubber (TSR), which is processed according to prescribed standards, has in fact been steadily going up for more than a week now.

ISNR-20 closed at Rs 48.50 a kg on September 21 and moved up to Rs 51 a week later.

After the Union Government announced the new export incentives for rubber, exports started to gain momentum.

As per the new rates, the subsidy for block rubber is fixed at Rs 2.50 a kg, which is higher than the Rs 1.75 per kg for the RSS-4 grade.

This has added to the attraction for block rubber exports. Industry sources say that 3,000-4,000 tonnes of ISNR-20 have already been contracted for exports during October-November period.

Industry sources also cite the non-availability of scrap rubber (field coagulum) in the market for the shortage of block rubber.

In India, scrap rubber is used for processing block rubber.

According to Mr M.T. Paul, Chairman and Managing Director of Auric Brown Crumb Rubber Pvt Ltd, large-scale hoarding of scrap rubber is taking place in the market.

"But for the hoarding, there is no reason why there should be such a shortage for scrap rubber since this is the tapping season," Mr Paul said.

The price of scrap rubber has also shot up to about Rs 35 a kg.

Though India is the fourth largest natural rubber producer in the world, the share of block rubber in its total rubber production is only 13 per cent,

Globally, however, it constitutes 55 per cent of the natural rubber production.

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