Following crude price high, price of natural rubber (NR) has crossed its all-time peak. Breaking the earlier record of Rs 118 per kilo, price of RSS-4 grade has hit Rs 120 per kilo on Wednesday.
The previous price high (Rs 118 per kilo) was on May 4, 2006. On NMCE, the futures have also flared up to Rs 121 per kilo in the May contract. Since international price of RSS-4 is moving in a very close margin with the domestic price, there is neither import nor export opportunity. Due to summer rains, there is acute sheet shortage. Latex production in the plantations is also at its low point. Although the recent surge is due to farmers slowly releasing the stocks that they had held back earlier, in anticipation of price rise, the scarcity of sheet is now emerging a reality.
Trade sources said that although the price factors are adverse, because of worldwide rubber shortage, there is no dearth of export orders from China and United States. Market experts told FE that the price may rule high for a fortnight or two, till the graph takes a downward swing in June. With crude putting the pressure on synthetic rubber price, industrial buyers now have lost the option to part-substitute NR with synthetic rubber. South West monsoon, expected in mid-May this year, may also radically alter the production and price graphs.
While Rubber Board claims a 6% increase in NR production in April, compared to the poor show in the previous year, it has not denied that there is a palpable gap between consumption and production. Against the 8.99 lakh tonne consumption projected for 2008-2009, the Board expects to achieve a production target of 8.75 lakh tonne. As much as 85% of the country’s rubber is produced in Kerala. It was mainly due to viral fever that paralysed the plantation labour in Kerala that the rubber production in 2007-2008 fell by 3% over the previous year.