With natural rubber prices surging past Rs 180 per kg mark in India, the Association of Natural Rubber Producing Countries (ANRPC) ? a global conglomerate of all major rubber producing countries ? has warned of dangers of ?bubbles in the market?.
Prices of rubber in the Kottayam market surged steadily in June, while the corresponding price in Bangkok suffered a sharp fall, the Kuala Lumpur-based outfit said in its latest bulletin. ?As supply remains tight amid strong demand, unhealthy speculation may come into picture creating short-lived bubbles in the market,? ANRPC said.
This comes at a time when both growers and traders in India are optimistic about a continued bullish phase.
?The entire Asian economy is agog with the kind of industrial demand that natural rubber demand can piggyback on. With rubber demand increasing even in China, robust prices are likely to prevail in India,? Sibi Monippally, general secretary, Indian Rubber Growers Association (IRGA), told FE.
Most traders believe that price for RSS-4 (ribbed smoked sheet- grade-4) may touch unprecedented Rs 200 per kilo soon.
India and China are the two countries with largest markets for RSS grades. Pointing towards the divergent path taken by Kottayam market, the ANRPC analysis said a sharp fall in RSS price in Bangkok from June 1 to June 10 did not reflect on the RSS market in Kottayam. In fact, prices in Kottayam market steadily rose from May 8 to June 25.
The ?divergent path? of Kottayam NR market could have three reasons, according to Jom Jacob, Senior Economist, ANRPC. ?First of all, existence of tariff protection for the domestic rubber production sector; secondly, pre-monsoon demand from domestic the tyre manufacturing industry and the last but not the least, increasing influence of aged trees and a downward revision in the country?s official forecast of output for the current year.?
At the same time, ANRPC gives credence to rubber growers? argument that there is a strong international demand, especially from China, from June. The current price uptrend is backed by tight supply because of the dominance of aged trees and climate-related constraints in major producing countries.