Vipin V. Nair

STRETCHING GAINS: A worker sorting out sheet rubber at a godown near Kochi. Natural rubber prices are inching towards the record level of Rs 70 a kg reached earlier this year. The RSS-4 grade was quoted at Rs 68.75 a kg on Thursday. Heavy rains, low arrivals and rising global prices have led to the current surge in rubber prices. — K.K.Mustafah

Kochi , Oct. 13

IN an unprecedented flare up this month, natural rubber prices in the domestic market are nearing a record high for the second time this fiscal, fuelled by surging international prices.

The benchmark ribbed, smoked sheet (RSS)-4 grade quoted Rs 68.75 a kg, marginally up from Rs 68.50 per kg on Wednesday. This is the highest-ever price recorded for natural rubber during October, industry experts said.

Earlier in July, the RSS-4 grade touched Rs 70 a kg, its highest ever recorded. However, prices tumbled, thereafter.

"This is the first time prices are reaching this high in October," said Mr N. Radhakrishnan of the Cochin Rubber Merchants Association.

The unusual jump is attributed mainly to surging international prices of the commodity. The matching RSS-3 grade is trading at least Rs 8 more for one kg in overseas markets such as Bangkok.

Rubber prices normally tend to ease during October as the peak-tapping season begins in the month in Kerala, which produces over 90 per cent of the country's natural rubber.

The average price of rubber during October 2004 was only Rs 52.77 a kg. In October 2003, it was Rs 51.55 a kg, while a year before that the monthly average price was only Rs 36.67 a kg.

"Going by the present trend in the market, it seems that the average price this month would be at least Rs 65 a kg," said rubber industry sources.

Apart from the international prices, onset of north-east monsoon in Kerala also moved up prices as tapping got disrupted in many parts of the State.

"The southern parts of Kerala have received good rains and this has affected supplies over the past two days," Mr Radhakrishnan said.

Sensing the rise in international markets, rubber growers are holding back their stocks, expecting the prices to move up further in the local markets. This has affected arrivals of sheet rubber, the sources said.

"Today many of the growers have Internet connection at home, and they know how the global markets are behaving," says a trader. "They check out international prices everyday."

Although daily production would have increased to around 2,500 tonnes, only just about half of that quantity is reaching the market these days, as farmers are not selling their stocks.

Industry sources said in spite of the high prices, consumers such as tyre companies are actively buying rubber as many among them are reportedly short of material.

Also, prospects of exports continue to look bright as domestic prices are lower than international rates. India has exported over 18,000 tonnes of natural rubber in the first half of the fiscal. For the full year, the Rubber Board expects exports of 40,000 tonnes.

The sources said orders for at least 10,000 tonnes of exports is pending for the current and next months.

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