High prices take their toll on small units; 250 closed in Punjab

Aravindan

While natural rubber is quoted at $2.2 a kg in the global market, synthetic is traded around $1.6 a kg.

Kottayam, May 3

April will be noted as yet another landmark in the history of Indian rubber plantation industry.

The strong demand of the raw material added almost 7.14 per cent gains to rubber prices as well as much cheer to the producing sector.

Sheet rubber opened at Rs 84 (83.50) a kg on April 1, and finished at Rs 89.50 on April 29 after touching an all time high at Rs 91 a kg on April 27. Profit booking from dealers and growers and the buyer resistance at higher levels kept the prices under pressure during the final two sessions. In futures, the May delivery contract which was quoted at Rs 87.29 (86.94) at the opening session of the month concluded at Rs 89.09 a kg on NMCE after touching an intra-day high at Rs 90.65 a kg on April 27. The total transactions recorded during the month were 55,643 tonnes. The delivery given in the month of April was 1,300 tonnes. The producing sector has every reason to remain jubilant.

According to reports from the north Indian sector, almost 250 units have already been shut in Punjab alone, unable to withstand the high prices of natural rubber. The phenomena might continue adding more figures to the dying small-scale industrial units from the general rubber goods sector as long as the prices continue to rule above certain critical levels.

The reaction may be different in the case of big players in the field. The difference between the demand and supply positions still offer a wide gap in between and the unhealthy speculation all over the marketing centres and commodity exchanges still contribute much to the on going bull run.

While natural rubber is quoted at $2.2 a kg, synthetic is traded around $1.6 a kg at the global markets now.

It is yet to be seen how far the trend would continue in the current market conditions. There are so many predictions and targets. The immediate forecast is Rs 100 a kg and the final long-term target is predicted even higher at Rs 120 a kg.

May usually witness a balanced demand and supply ratio due to a favourable turn in climatic conditions prior to monsoon.

According to official statistics, stocks with the Central Warehouse Corporation stood at 5,994 tonnes as on April 25.

Hence, it is reported that the prices would remain comparatively cool till heavy monsoon rains put a halt to tapping process inducing further scarcity of the raw material.

(This article was published in the Business Line print edition dated May 4, 2006)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.