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Rubber prices at 31-month high

Aravindan

KOTTAYAM, May 27

RUBBER prices have again touched the level of Rs 35 per kg for RSS-4. This level was last touched in October 1998. It is considered fair by many small growers. But the manufacturers especially those in the tyre sector have started measures to bring down the prices. They plan to import rubber under duty exemption pass book (DEPB) facility as the advance licenses remain suspended for the time being.

The early arrival of monsoon and the resumption of regular purchases by major rubber manufacturers have contributed to the sudden upswing in the market. The monsoon has interrupted tapping an consequently crop arrivals are very low.

Usually the rubber planters used to rainguard the trees by April-May. But they were unwilling to tap trees using rainguard as the price remained uneconomical for a long time.

Dealers and growers also did not retain considerable stock with them in view of the unsteady market conditions. Hence almost all the crop generated earlier had been transacted at low prices.

The State Trading Corporation (STC) has already stopped its rubber purchase as the State Government has not exempted them from paying 11 per cent purchase tax. The time limit to procure rubber as directed by the Government expired last month.

It was announced earlier that the rubber would be purchased only up to the benchmark level of Rs 34.05 a kg. Now that the market has crossed the limit, STC is unlikely to renter the market for supply of rubber to the advance license holders at the intern ational prices.

Only by enhancing the benchmark price and getting clear direction from Government, the STC can procure rubber. Though there is marginal improvement in the international market, the ruling price of RSS-3 which used to be imported into India in place of RS S-4 is below Rs 30 per kg, while it is currently priced in India around Rs 35 per kg.

Even if rubber is imported on paying 25 per cent duty plus 4 per cent SAD (special additional duty), it will cost only around Rs 41 a kg at the port of entry. Considering the present price, sales tax, cess, transporting charges etc, the price in the dome stic market will be more or less equivalent to this, the traders say.

The manufacturers apprehend that the prices may rise further during the monsoon period. The growers also are anxious to find if the prices would nosedive when the tapping season commences. Only by taking immediate steps to control imports and enhance the benchmark price, the problems could be solved, they say.