The Hindu Business Line : Rubber may dip further as tapping peaks

NATURAL rubber prices, now on a downhill journey after ruling at record highs, are likely to sink further in the coming days as tapping picks up and more sheet rubber hits the market.

The benchmark ribbed smoked sheet (RSS) 4 grade traded on Friday at Rs 57.50 a kg. Barely a month ago, the same grade had touched a record-high Rs 70 a kg.

Rubber industry sources said prices could come down to the level of Rs 51-52 a kg over the next fortnight as tapping gets into full swing in Kerala, which accounts for over 90 per cent of the country's natural rubber production.

Rubber prices had gained about 15 per cent since January till August, before the current crash. Soaring international prices and shortage of rubber in the market led to such price escalation. However, once the weather started showing signs of improvement and consuming sectors took a cautious approach towards buying, prices started to fall.

"We knew that prices would come down once the rains were over, but nobody expected a crash like this," a rubber trader said. "It looked like a consolidation in the beginning, but then it became a fall."

Rubber industry sources say the main factor that led to the price fall is the onset of the peak tapping season in Kerala. After the monsoon, tapping is resumed in Kerala from August and production peaks during the September-December period when the weather is most conducive.

Tyre companies, which consume 54 per cent of the 7.5 lakh tonnes rubber produced in a year, are not actively buying rubber these days. This lack of demand is also affecting prices.

Fluctuating international prices are another reason for Indian rubber prices to plunge. From $1.80 a kg, international rubber prices have crashed to around $1.50 a kg.

Such wide oscillations seen this year have made rubber one of the most volatile commodities in the market.

Our Correspondent reports from Kottayam: Panic selling from dealers and traders holding excess stocks continued to dampen the spot rubber prices on Friday.

The market opened on a weak note and declined further in the absence of buying interest. .

Most grades surrendered heavily but latex remained flat but inactive while total volumes were narrow.

NMCE was closed on Friday on account of Rakshabandhan.

The MCX rubber futures were better quoting the September contract at Rs 57.90 (Rs 57.19), October at Rs 57.15 (Rs 55.69), November at Rs 56.25 (Rs 55.63) and December contract at Rs 56.70 (Rs 55.18) per kg for RSS 4. Transactions were dull at 842 lots, with 425 in September, 198 in October, 127 in November and 90 lots in December up to mid-session.

The September futures for RSS 3 improved to 162 yen from 160.5 yen at TOCOM. At Bangkok, RSS 3 declined to Rs 65.89 from Rs 66.68 a kg on Thursday.

Physical rubber prices (a kg) were: RSS-4: Rs 56.50 (Rs 57.50); RSS-5: Rs 54 (Rs 54.50); ungraded: Rs 50.50 (Rs 52); ISNR 20: Rs 52.50 (Rs 54); and latex 60 per cent: Rs 37.50 (Rs 37.50).

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