The Hindu Business Line : Rubber scales another peak

Natural rubber prices reached yet another record in the domestic market with the benchmark Ribbed Smoked Sheet 4 grade (RSS-4) touching an all-time high of Rs 85 a kg on Tuesday. "Rubber growers are going to have a grand vishu (a festival in Kerala) this year with such prices," said a trader.

Although tyre companies, which consume over 50 per cent of rubber, stayed away from the market, the RSS-4 grade moved up to Rs 85 a kg in inter-dealer trades. A sudden spurt in prices in Tokyo market and rising crude prices that would push up synthetic rubber rates are the main reasons for today's rise in the local market, a trader, who did not want to be named, said.

"The bullishness in gold is also helping all commodities," he said.

Scarcity

Another factor that has impacted the local price is the shortage of rubber. Although the Rubber Board claims that production in 2005-06 would be around — or even a shade over — eight lakh tonnes, the traders are saying there is severe shortage of rubber in the market.

It is estimated that the stock, as of March-end, would be only around 75,000 tonnes, which is just about enough for a month's consumption by the industry.

With April's production expected to be lower when compared with previous months because of summer, the stocks would further shrink.

"I think by end of April, we will have only 50,000 tonnes of stocks in the market," the trader said. If stocks shrink further, prices may climb further during May and June. Currently, the international prices are about Rs 10 dearer a kg than the Indian rubber prices. Tyre companies recently said that they would import 25,000 tonnes of natural rubber to tide over the shortage in the local market, even if they will have to shell out more. "Prices may rise further unless the tyre companies import rubber as they have stated," he said.

FUTURES GAIN

Our Correspondent reports from Kottayam: Spot rubber closed unchanged on Tuesday. The market remained in a holiday mood as most of the traders were inactive. The transactions and arrivals were in a low key.

The NMCE rubber futures recorded smart gains as leading international markets were bullish. The April contract was quoted at Rs 84.56 (Rs 83.73), May contract at Rs 87.27 (Rs 86.40), June contract at Rs 88.83 (Rs 87.89), and July contract at Rs 88.90 (Rs 88.04) per kg for RSS 4.

Spot rates (akg) were: RSS-4: Rs 84 (Rs 84); RSS-5: Rs 83 (Rs 83); ungraded: Rs 82 (Rs 82); ISNR 20: Rs 83.25 (Rs 83.25); and latex 60 per cent (a litre): Rs 59.50 (Rs 59).