Natural rubber rates fall as crude weakens

Written by M Sarita Varma | Thiruvananthapuram | Updated: Jul 14 2009, 06:11am hrs
Due to crude prices weakening and surge in import, the natural rubber (NR) price has declined. The NR price has come down to Rs 96 per kilo this week, compared to the Rs 98-99 range in the last fortnight.

Crude prices had been squeezing synthetic rubber (SR) demand so much through out 2008-2009 that NR to SR ratio in automobile sector consumption had stretched to its most comfortable high of 75:25. Apparently, this trend is shifting to reverse gear in July, experts told FE. As monsoon improved in the plantations in Kerala, the increase in production would halt further jacking up the prices. Meanwhile the Rubber Board estimates say that the output in the first three months of the crop year to be 11% lower than last year.

However, because of the substitution-effect of crude-linked synthetic rubber in tyre manufacturing, NR price had remained weak when crude oil prices surged to $67.97 per barrel on 1 June 2009. Crude oil price is now below $60 per barrel. International price for the high grade RSS-4 is as low as Rs 79 per kilo. Compared to last years volumes, exports in the first quarter have shrunk to one-third and imports have more than doubled, Rubber Board spokesperson said.

The NR stocks of June closed at about 1.9 lakh tonne while the corresponding period in the previous year, it was only about 1.4 lakh tonne. Together with imports, this could cater to a consumption-appetite of about 72,008 tonne. The rubber farmers look at low range of international price with alarm, Josekutty Antony, President, Rubber Nursery Owners Association says. While NR production in almost all major countries saw setback, 2 medium producers found their rubber output zooming. NR production in China grew 138% and that of Sri Lanka was up by 10% in the five months ending in May. Secondly, yen gaining strength against dollar also favoured easing of international price for premium rubber grades.