Spot rubber turns weak

Spot rubber turns weak


Kottayam, Aug. 21

Spot rubber closed weak on Saturday. The market appeared to be in a holiday mood prior to Onam.

Sheet rubber surrendered further to Rs 170 from Rs 171 a kg on buyer resistance.

The general trend was mixed as ungraded rubber, ISNR 20 and latex finished flat amidst comparatively thin volumes.

Futures improve

The September futures for RSS 4 improved to Rs 168.20 (167.24), October to Rs 164.14 (163.19), November to Rs 164.17 (162.78) and December to Rs 165.36 (163.81) a kg on National Multi Commodity Exchange (NMCE).

The volumes totalled 2576 lots and turnover 43.03 crores. The open interest in all series was 4083 lots .

Spot rate

Spot rates were (Rs/kg): RSS-4: 170 (171); RSS-5: 161 (162); ungraded: 156 (156); ISNR 20: 150 (150) and latex 60 per cent: 111 (111).



Rubber prices take a plunge

‘Psychological impact' of reduction of import duty
International prices make steady climb

Arrivals continue to be scarce

KOTTAYAM: With the Union government slashing the import duty of Natural Rubber (NR) from 20 per cent to 7.5 per cent, the NR prices took a plunge to Rs.174 a kg from the dizzy heights of Rs.186 a kg it had soared during the first week of the month.

In fact, the month opened at Rs.184 a kg and quickly climbed to the all-time high at Rs.186 a kg ($402.40 for 100 kg) and held the price for two consecutive days before tapering off to Rs.180 a kg ($385.95 for 100 kg) on Thursday, before plummeting to Rs.174 a kg ($373.05 for 100 kg) on Friday. This denotes a loss of $1,978 per 100 kg during the week.

However, the international prices at the same time made a steady climb during the week which opened at Rs.152.33 a kg ($ 327.05) at the Bangkok market. The week closed at Rs.156.19 a kg ($334.90) denoting a gain of Rs.3.85 a kg ($.7.85 per 100 kg)

According to George Valy, president, Indian Rubber Dealer Federation, the sudden fall in price is only a result of the psychological impact of the news on slash in import duty. The decision of the tyre manufacturers to keep away from the market and pressure on the growers to go in for Onam festival selling too might have impacted the fall in the prices. With the rain continuing for at least another week, the arrivals would continue to be scarce, though it may pick up in September, he said.

Optimism

In spite of the political hue and cry, many believe the internal rubber industry would be able to withstand its adverse effects on account of the ground realities prevailing in the Indian market which is blessed with an unprecedented boom in automotive industry and the tyre industry.

The projected consumption of NR in the country for the current fiscal is expected to be 9.78 lakh tonnes, according to conservative estimates, while the production is expected to reach an all-time high mark of 8.93 lakh tonnes – denoting a gap of 85,000 tonnes.

However, Rubber Board authorities point out that this deficit would not result in a scarcity as there is already a stock of 2,30,420 tonnes of NR by May end.

Problem for UDF

But, the Centre' decision has given the Left Democratic Front yet another stick to beat the Congress-led United Democratic Front in the latter's stronghold where rubber prices are as sensitive a political issue as it is an economic issue. With the Centre agreeing to a monthly review of the situation and imposing various stipulations on the import, the growers may take a wait and see attitude to the new development.