The Hindu Business Line : Natural rubber touches Rs 100/kg mark

For the first time in the history of India's rubber trade, natural rubber touched Rs 100 a kg mark today, driven by surging international prices and a lingering shortage of the commodity in the local markets.

Natural rubber jumped Rs 3 a kg today from yesterday's close of Rs 97 to touch Rs 100.

Rubber industry sources said some deals were struck even at Rs 100.25 a kg for the benchmark ribbed smoked sheet (RSS) 4 grade.

Since the beginning of this year, rubber price has jumped by around 40 per cent to reach the present level. In January, prices hovered around Rs 71 to Rs 80 for a kg.

Since then, natural rubber has been on a perpetual ascent, breaking records every month. In April, the prices crossed Rs 90 a kg, prompting many traders to predict that the landmark Rs 100 for a kg was just round the corner.

"The main reason for this boom is the trends in futures market and international prices," said Mr N. Radhakrishnan of the Cochin Rubber Merchants Association.

The June and July contracts of natural rubber futures at the National Multi-Commodity Exchange (NMCE) quoted Rs 101.3 and Rs 102.5 for a kg today, influencing the spot prices.

The widening price difference between Indian and international prices is another factor driving the local market. RSS-3, which is the corresponding grade in Bangkok, is about Rs 14 higher than the RSS 4.

Thursday's rains across Kerala, which produces over 90 per cent of India's natural rubber, also contributed to the spurt in local markets. Although farmers take recourse to rain guarding, production is usually lower during rains.

Already the market is reeling under shortage of rubber, and many traders fear that the rains would further deplete supplies.

"Availability of rubber is still very low. Only very few growers are selling rubber even at these prices," Mr Radhakrishnan said.

The price difference of Rs 10-15 a Kg between Indian and international rubber is adding the attraction for exports. Industry sources said April alone saw exports of 6,000 tonnes.

`Ban exports'

Tyre makers and other rubber consumers have demanded that the Government temporarily ban exports to natural rubber to ensure adequate supply of their raw material in the domestic market.

Growers' associations have stoutly opposed such moves, saying that Indian rubber consumers are still getting the commodity at much lower rates than their counterparts abroad.

More Stories on : Rubber | Exports & Imports | Commodity Exchanges

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