According to figures available with The Financial Express, natural rubber scaled a new peak of Rs 37 per kg on May 26. Prices remained stable at the same level on the subsequent day.

The last time rubber touched the same level was on October 1997. Industry sources said a major factor that boosted the prices was the buoyant seasonal demand from tyre manufacturers. The rubber-consuming industry was buying the commodity in a big way anticipating the lean supply during monsoons that began last week. The tyre industry, which was following a zero inventory policy, was active in the market as their stock position was nil after the end of the financial year. Another factor that helped prices scale the new high was inadequate supplies following heavyrains in the rubber-growing belt of the state. The incessant rains had disrupted the supply chain of natural rubber as the traffic movement was thrown out of gear preventing the accumulated stock entering market.

Sources also said contrary to earlier seasons, the growers stopped tapping during the rainy season and fresh arrivals were almost negligible. A major factor that forced growers to halt tapping during the rainy season was the crash in prices, traders said.

In the past, growers used to tap rubber using rainguards as the prices were high. Trade sources also said the lag effect of the ban imposed by the commerce ministry on import of natural rubber under the Advance Licensing Scheme (ALS) had also revived market sentiments. Though the government has banned imports of natural rubber under ALS, an estimated 20,000 tonnes have reached the country under agreements already entered into. With the ban in fresh imports under ALS, manufacturers are now buying rubber directly from the State Trading Corporationof India (STC).

STC, perhaps, may be a major beneficiary due to the sudden jump in prices as the agency made a windfall gain in the uptrend. STC had bought the commodity cheap earlier and sold it dearer when the demand-push came.