Natural rubber prices have been moving in a tight band of Rs 4 per kg because of fears of increased supplies due to exemption of central sales tax on inter-state trade, while slow tapping and demand are preventing them from falling sharply down.
The prices went up to as high as Rs 142 per kg and settled at Rs 138 per kg.
The small downward trends in prices was following the better stock arrivals to the market after a notification exempting rubber from central sales tax on inter-state trade.
The refund had been already allowed for 2% CST paid along with VAT for rubber. But traders were irked by the delay in getting refund. This had caused cash liquidity issues. Once the notification spared the rubber trade from CST from August 1, more stocks have started flowing to the bourses.
Although the domestic price is looking up and Rs 5-7 per kg higher than the Tokyo price (Rs 133 per kg), it is unviable to import. Imports cost an additional Rs 10 per kilo in duty. Thus the Automotive Tyre Manufacturers’ Association (ATMA) had demanded that one-lakh tonnes of duty-free imports should be allowed. However the rubber farmers are not in favour of duty free imports.
“Industry’s lobbying for duty-free import is a well-timed strategy to push down the pressure before the rubber season begins in early September,” says Josekutty Antony, President, and Rubber Nursery Owners’ Association.
In 2007, April-May imports were only 7,245 tonne. This year natural rubber imports during April-May are head and shoulders above NR exports (23,091 tonnes, in the same period) at 23,139 tonne.
Looking at the production trends, experts don?t expect the price to downslide before August end. This is when the regular tapping season resumes. Intensive tapping, even in off-season, has been reported from plantations almost in a conscious effort to make up for the 3.2% negative growth last year due to viral fever epidemic among farm labourers, said a board official.
In August, Rubber Board projects about 55,000 tonnes production. The demand-supply gap, however, is estimated consumption in August is about 70,000 tonne.