After a gap of seven years, the rising price trend in natural rubber has brought relief to the community. Prices touched ₹165 per kg for RSS-V grades, while international prices also started moving forward.

With favourable climatic conditions across growing regions, farmers are taking advantage of the rising price trend. However, there are reports that many growers are taking a cautious approach in disposing of their stock by adopting a “limited scale selling”.

This is particularly because of higher international prices at ₹186.90/ kg in Bangkok. “When international prices are hovering higher by almost 15-20 per cent of the domestic prices, farmers will always be reluctant to sell the commodity, anticipating a surge in the domestic market higher than the global rates,” said a farming community source.

George Valy, President, Indian Rubber Dealers Federation, said that there has been a comfortable buying from the industry as import prices have increased. Of late, imports have reduced considerably due to hike in shipment rates, delay in clearing, shortage of empty containers etc.

The market assumption is that the price trend is likely to sustain particularly due to increased demand from OEM and the replacement segment as well as the government’s decision to put tyre imports into restricted category.

Contributing factors

Santosh Kumar, Executive Director (Rubber Operations), Harrisons Malayalam Ltd, said prices have seen an upward rally since last month. He attributed several factors which included extreme climatic conditions in major producing nations; increased consumption by the industry post Covid; recovery in the Chinese economy that significantly increased consumption, and surge in demand for dry rubber grades due to rising uptake by domestic tyre manufacturers. There is an increased demand in other sectors too due to opening up of industries, which is translating into more business for growers.

New rubber rates

“I feel that the period of low rubber prices seems to be over and rates may see a new level in future,” he said citing the growing frequency of extreme weather events, which would impact supply. The spread of fungal disease is also a concern which will continue to keep the supply pipeline constricted.

These increased prices could enthuse growers to up production. However, there is a pressing need to rake up production and capacity utilisation , which is vital to the economic and industrial growth of the nation, said Kumar.