Agri Business

Rubber output up in Dec; consumption drops 1.3%

C. J. Punnathara Kochi Jan.3 | Updated on January 27, 2011 Published on January 04, 2011

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Natural rubber production increased last month to 1,01,500 tonnes as against 1,00,850 tonnes in December last year. The increase in production was due to favourable weather conditions during the month, sources in the Rubber Board said.

The cumulative rubber production for April-December period, meanwhile, increased 2.8 per cent to 6,49,650 tonnes (6,31,750 tonnes). The good news on the production front comes in the wake of record prices notched by natural rubber in both the domestic and international markets. The good tidings is a shot in the arm for small growers who account for over 90 per cent of the country's rubber production.

Record prices

The New Year was marked with rubber prices in the spot market hitting an all-time high of Rs 208 a kg even as futures prices continued to reign at record levels. The year 2010 saw rubber prices rising 48 per cent in futures and spot markets, Geojit Comtrade said.

In the international markets also, rubber scaled record levels in most markets. The main reasons for the spurt in prices was the robust demand, especially from China and India due to an automobile boom and a fall in supply due to adverse weather conditions, which, in turn, created demand-supply mismatches. This has forced countries such as China to increase imports and their latest warehouse inventories reveal a 1.8 per cent rise in stock to 66,515 tonnes, Geojit Comtrade pointed out.

Growth trigger

The consumption of natural rubber in India had registered a fall of 1.3 per cent to 77,500 tonnes (78,500 tonnes) in December. However the aggregate consumption during the first nine months of the fiscal rose by 1.6 per cent to 7,06,050 tonnes (6,95,065 tonnes). The trigger for the growth came from the Indian auto tyre sector where demand grew by 3.4 per cent even as the non-tyre sector registered a fall of 1.4 per cent.

Import of natural rubber increased for both sheet and block rubber as domestic prices sometimes outpaced international prices during the first half of the year. However, the price disparity between domestic and international prices has now been contained and international prices have been ruling well above domestic prices since November. This augurs well for the country's export sector, which had been languishing during the first half of the current year.

Rubber Board officials also pointed to the downward trend in consumption from November and said that production during the remaining months could be higher than last year's levels. Stocks available at the end of the year are estimated at 3,07,170 tonnes, which is higher than the 2,69,740 tonnes available at the end of last year. Almost 65 per cent of the stocks are available in usable form with the tyre companies and should be sufficient for their requirements for the coming couple of months, sources pointed out.

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Published on January 04, 2011
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