Rubber prices to rebound by year-end

According to commerce secretary, rubber prices were expected to stabilise once the rates cross the Rs 30 a kg mark.

At Kottayam, the primary market, rss four grade prices touched the Rs 3500 a quintal mark last week to keep the tempo in the prices witnessed since the last fortnight.

Rubber prices have tended to rise in view of onset of monsoon in Kerala, which produces over 95 per cent of the total rubber produced in the country, and fall in frequency of rubber tapping.

Rubber consumption by tyre industry, whose offtake is nearly 50 per cent of the total production, increased by one per cent in 1998-99 and it was bound to pick up substantially during second quarter of the current financial year, automotive tyre manufacturers association (ATMA) director general D Ravindran said.

Ravindran said though there was a carryover stock of two lakh tonnes from the 1998-99 fiscal, most of it could be of sub-standard quality which could not be used by the tyre companies.

It was the bulk demand from the tyre industry which determined prices of natural rubber in the country, he said, adding while consumption was bound to improve, frequency of tapping by growers, usually small growers, had also decreased.

The tyre manufacturers association projection of a tight supply situation is despite the rubber board’s projection of production outstripping demand for the third consecutive year.

India’s rubber consumption for the current fiscal has been put at 6.23 lakh tonnes, while production has been estimated at 6.27 lakh tonnes.

Mathew said the recessionary trend had `bottomed out’ and in view of regulated supplies and improved consumption, prices could improve.

Better prices for the growers could mean that production would increase further, Mathew said, adding during the last two years despite lower prices India had only witnessed a reduction in growth rate of production.

While prices of rss four grade have fallen from Rs 60 a kg in 1995 to an eight-year low in December to below Rs 24, growth in rubber production declined to 3.5 per cent last fiscal from around seven per cent in previous years.