Lean season for natural rubber to continue

Written by M Sarita Varma | Thiruvananthapuram | Updated: Mar 10 2012, 08:46am hrs
There seems to be more bad news for natural rubber. producers. According to the Association of Natural Rubber Producing Countries (ANRPC), the lean season will continue unabated, with all major rubber-producing countries facing large-scale uprooting of trees for replanting.

In 2012, natural rubber (NR) supply can rise only 2.6% , according to estimates, based on projections by member countries, says Jom Jacob, chief economist, ANRPC. During 2011, the growth in NR supply was 8.2%. This could keep the NR prices buoyed, he told FE.

In the March-April-May period, NR production traditionally falls, as the rubber trees face their leaf-shedding season. While the peak season months(November-December) account for 11% of the annual rubber output, March, April and May 2012 are expected to produce only 4.8%, 5.8% and 7.4% of the total NR-annual supply this year.

In Kottayam, Indias rubber production hub, sheet rubber (RSS-4 grade) is trading at R186-187 per kilo. Volumes have been dull, say traders.

NR market has also benefited from a marginal fall in the commoditys stock in China, says Dato Dr.Kamarul Baharain Basir, Secretary-General of the Kuala Lumpur-based rubber producers' outfit, in the ANRPC's latest statistics bulletin.( Vol 4: No12: February 29). It is also backed by " rise in crude oil prices, depreciation of Japanese yen, and appreciation of NR-exporting countries currencies," adds the bulletin.

From the Indian market's point of view, the most recent development is that NR has become less expensive than synthetic rubber (SR). About six months ago, the downstream manufacturing industry had been complaining that NR was 30% costlier than SR. Many rubber products, especially tyres, required a judicious mix of the two kinds of raw materials. The new situation is expected shift the market in favour of NR in the coming days. NRs relative share had fallen by 2% points during 2009-2011 globally, says Jom Jacob. If the relative share of NR rises by 1%, this can help expand the global NR demand by about 2,75,000 tonne, he adds.

According to rubber board chairman Sheela Thomas, India's rubber production in January 2012, was up 3.7% at 1,02,500 tonne. Rubber Board had estimated production for February to fall to 61,000 tonne and that of March to go even lower at 59,000 tonne. Sources say that estimates of NR stocks in India may soon get downward revision.

Rubber Board reports that number of aged trees is going up. In the total yielding area, the percentage of trees in the age category 21 years and above rose to 54.4% in 2011 from 20.1% in 2000. For India, the sole piece of good news is that proportion of tender-yielding trees to aged trees is likely to go up by 2013.