Both, the Rubber Board and trade sources, are expecting a reversal of fortunes of the sector towards the turn of the century. Industry sources said Kerala government's decision on Friday to procure 4,500 tonnes of natural rubber through its three procurement arms -- Rubco, RubberMark and the Warehousing Corporation-have changed market sentiments, which has been the lowest ebb in the first two weeks of this month.

Anticipating bumper production during the peak tapping season starting October, the punters have drove the prices down tothe ground this month with the internationally comparable RSS-4 variety hitting a low of Rs 26.75 per kg on September 20 and 21 from the monthly opening level of Rs 32 per Kg. The government has extended guarantee for the funds to be tied up by these procuring agencies from the state-run co-operative banks. The rubber so procured will be exported by floating global bids, according to sources in the state agricultural ministry.

"With the announcement, the market sentiments have revived and the user industry anticipating an increase in prices are also like to make substantial purchases", a Kochi-based trader said.

The other silver line in the cloud for the sector was the signs of recovery in both the segments of the demand industry; tyre and non-tyre sectors. The tyre sector which posted a negative two per cent growth rate during the last fiscal has managed to reverse its fortunes with the production growing around nine per cent this fiscal.

Similarly, the non-tyre sector has also posted a positivegrowth of about eight per cent in this fiscal compared to four per cent last year, sources pointed out.

"The total consumption for natural rubber rose to 52,000 tonnes per month in August and September from its previous level of 49,000 tonnes", sources said adding "this has helped narrowing the demand-supply mismatch".

Besides, there has been an estimated shortfall in production to the tune of six per cent during the April-May period helping the prices to recover by eight per cent during the period, sources said. The decline in production was mainly attributed to the intermittent rains that lashed the major rubber growing areas in central Kerala.

To top it all the firming up of international prices has also made the imports costly and exports attractive. The price gap between the domestic and international prices has narrowed considerably over the months.

On Friday, while the Indian RSS-4 variety was quoted at Kottayam market at Rs 27.50 per kg the Kualalumpur price for the comparable RSS-3 varietywas quoted at Rs 25.37 per Kg.

Sources are hopeful that with buoyancy in demand the market would be able to absorb the projected 75,000 tonnes per month production during the peak tapping season beginning next month.