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Rubber market restrained on low growth

Aravindan

KOTTAYAM, July 10

THE rubber market has remained calm for over a month now. Demand remained quite moderate, following low growth in the rubber manufacturing sector. Growth in natural rubber consumption was only 0.5 per cent during 2000-01. Low growth has continued during April, May and June this year.

Rubber consumption in June was particularly low following widespread rains in almost all regions of the country and the consequent slow down in factory operations.

Monsoon continued to be active in the rubber-growing regions and rubber tapping remained almost suspended during June, though in a few places there was rain-guarded tapping. In the absence of normal crop harvesting and processing, arrival of processed ru bber in the market was very low. Trading was mostly from the carryover stock.

The market had expected a surge in rubber prices during June. It is a low production month for natural rubber. Generally, the rubber price moves up in the month following supply crunch. But the price of RSS 4 fluctuated between Rs 33 and Rs 34 per kg tho ugh it had surged upto Rs 35.50 per kg in the last week of May.

As July is also a lean production month, trading in June is generally high as manufacturers prefer to keep some stocks to face the supply crunch in the month ahead. There was no perceptible improvement also in the trading volume. Very low production of r ubber and equally low arrivals in the market did not induce the buyers to make purchases apprehending supply crunch.

On the manufacturing front, movement of finished products was quite sluggish and the manufacturers considerably reduced the quantum of raw rubber ordered for. Trading stagnated around 10,000 tonnes of dry rubber and around 1,000 tonnes of centrifuged lat ex per week in the main rubber marketing centres of Kerala, whereas in the normal course transactions upto 15,000 tonnes of centrifuged latex used to take place a week.

The top grade sheet rubber RSS I was traded at Rs 37 per kg. However, the quantum traded was nominal. There is short supply of top grade sheets as is common in the monsoon season. Demand for the grade was also not high.

Sheet rubber RSS 4 generally used by the tyre companies did not attract the usual demand. Its average price was Rs 33.50 per kg during June, below the benchmark of Rs 34.05 per kg fixed in 1998 for the grade. Price of ungraded rubber fluctuated between R s 30 and 31 per kg during June.

Rubber price in the international market remained around Rs 29 per kg for RSS 3 imported into India in place of RSS 4. This prompted the manufacturers, especially in the tyre sector, to think of importing it under OGL as natural rubber import under advan ce licence has been suspended from February 1999 in view of the excess stock in the country. The quantum over and above the estimated consumption and two months' stock cover is considered as excess rubber.

As per Rubber Board's statistics, the country had 183,900 tonnes of carryover stock at the end of March 2001, which left a surplus of 79,000 tonnes. Though the Commerce Minister, Mr Murasoli Maran, has turned down requests for restoring the advance licen ce imports, reported move of the manufacturers to bring in OGL imports even at slightly high landed cost affected the market sentiment.

Availability of centrifuged latex as well as its demand was also low. Active monsoon drastically curtails the supply of field latex for centrifuging. As the monsoon gained momentum in the north Indian regions, operations of dipped goods factories were al so in low key and their latex purchases were low. The latex concentrate was traded around Rs 50 per kg (dry weight) by the close of June. During the first week of July also the market remained almost sedate, both for dry rubber and centrifuged latex.