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Rubber prices fall to Rs 27.75/kg

Aravindan

KOTTAYAM, Dec. 14

RUBBER prices have nosedived to a 12-month low this month, with RSS 4 grade dipping to Rs 27.75 per kg on December 9 at the main marketing centres from Rs 30 a month ago.

In the rural markets, the prices are quoted at Rs 27.50 per kg. Ungraded rubber was quoted at Rs 25.25 in the main marketing centres and at Rs 24 in the rural markets. The domestic prices have been ruling below the international prices for over three wee ks now. RSS 4 is now quoted in the international market at Rs 29.60 per kg.

Lack of consumer demand is the main reason for the current price fall. Rubber manufacturing activities are at a low key in the tyre sector, industrial rubber goods sector and the general rubber goods sector for the past-seven months.

Natural rubber consumption which was estimated to go up to 3,26,000 tonnes during the first half of 2000-01 ending September, was only 3,12,000 tonnes. At the same time the production matched the estimated 2,81,000 tonnes.

The slow growth in consumption has mainly been on account of the sluggish growth in the truck and bus tyre sector. This sector accounts for as much as 70 per cent of the overall natural rubber consumption.

The domestic prices of centrifuged latex have of late fallen below the international prices. For over three weeks the domestic latex prices have been ruling around Rs 21 per kg (wet weight), while the international prices are quoted around Rs 23 per kg.

Lack of procurement support has also contributed to the fall in prices. The Government's directive to the State Trading Corporation to procure 20,000 tonnes of rubber from the domestic market for supply to the rubber goods exporters at international pric es hardly worked since the international prices are ruling above the domestic prices. In the absence of demand from the exporters, STC did not ask its purchasing agents to procure rubber.

Even the court verdict on floor price notification failed to enthuse the market. Earlier the High Court of Kerala had allowed the petition filed by the Independent Farmers' Agency for direction to the Union Government to fix a floor price for rubber.

The Government had filed a Special Leave Petition in the Supreme Court against this, claiming that there was no provision in the Rubber Act to fix the floor price. But the Supreme Court rejected the plea since provision existed in the Act to fix the mini mum price. The Government had not invoked the provision for about two decades.

The rejection would compel the Government to notify a minimum price after a fresh cost study. Once the minimum price is notified, the Government would be compelled to take prosecution steps against persons buying or selling rubber below the notified pric e. At the current demand-supply equation there is no prospect of prices rising to Rs 34 per kg.