Kochi: Belying all hopes of an immediate recovery, natural rubber prices had hit a six-year low during the second week of February. Experts see prices crashing further as the demand was thin and the thick supply situation including the huge accumulated stock, which is much more than what the market coan take. The price for the RSS-4 variety touched a record low of Rs 24.50 on February 8. Top sources in the Rubber Board told The Financial Express that prior to this the lowest-ever price recorded during the last six years was in 19992 May when the average price dipped to the same level of Rs 24.50 per kg. Prior to this the price hit the trough of Rs 26 per Kg in January 1994. On February 23 and 24 last year the price of RSS-4 touched Rs 25.75 per kg. The next trough was recorded in May 6, 1998 when price dipped to the Rs 25.25 per kg level. Rubber prices which were remaining range bound at Rs 33 per kg started melting down since October last. The average price for the RSS-4 variety which stood at Rs 33.38 perkg in October last start moving southwards with prices declining to Rs 32.89 per kg in November, Rs 29.68 per kg in December and Rs 26.95 in January this year.For the first time during the past couple of years, the domestic price has been ruling much below the benchmark Malaysian prices. When the market closed on Wednesday the difference between the Kottayam market and the Kulalumpur market was about Rs 4.05. The current crash assumes significance as the rubber plantations across the state have cut down or stopped production following the onset of summer. "The crash in the lean season is an ominous sign as in the previous years price used to move up as per the natural law", a dealer said.
Market sources said a major reason for the crash in prices was the thin demand from the tyre industry on top of a huge accumulated stock. The Rubber Board has estimated an excess supply to the tune of 1.91 lakh tonnes by the end of the current financial year. They said the procurement programme launched by both thestate and the central agencies turned out to be a total flop. They said while the state-run agencies after a spate of one upmanship propaganda blitz made a quite exit from the market last month. "They had together hardly procured a single tonne of rubber from the market", market sources alleged.
The State Trading Corporation's procurement drive has also not reached anywhere and the total commodity the agency has mopped up from the market so far stood at around 8,000 tonnes against a target of 20,000 tonnes.Sources said, tyre industry has virtually withdrawn from the market in anticipation of a further crash in prices. They said, though the industry has agreed to lift directly from the dealers routed through the STC, they have later pulled out from the agreement.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
Printer-friendly page
