Rubber SMEs suspect hoarding behind NR pinch

Written by M Sarita Varma | Updated: Jul 12 2013, 09:28am hrs
Supply squeeze, accompanied by a sudden sharp price rise of natural rubber (NR), has placed rubber processing SMEs in some spot of bother. In just 11 days, NR prices have shot up by 7%, say estimates based on the price statistics furnished by Rubber Board.

Rubber is just not available, domestically, said

Niraj Thakkar, president of AIRIA (All India Rubber Industries Association). At a time when the international price of NR is falling, we have not seen a domestic supply crunch of this scale, at least in recent times. In a challenging economic environment, a sudden rise in NR prices, the key raw material, has added to the cost push eroding the already wafer-thin margins of the rubber SMEs. There are no signs of a cool down in prices.

Thakkar also felt that following the daily escalation in prices, growers are possibly holding their stocks. It was this hoarding that led to non- availability in the market and further increase in prices, he said.

According to Rubber Board, the NR prices jumped from R179 on June 28 this year to R192 per kg currently, a rise of R13 per kg . At present, domestic NR prices are marked 21% higher than international prices. As against domestic prices of R192 per kg, the international prices (RSV 3) are at R159 per kg. Interestingly, the international prices have come down from R168 per kg on June 28, 2013 to R159 per kg currently.

We have been able to procure only 40% of our requirement of NR in the last one month. Thus the production schedules of the industry have now gone haywire, said Thakkar.

More than 90% of the countrys rubber comes from Kerala. Climatic vagaries in rubber orchards were the main cause of shortage, Siby J Monipally, general secretary, Indian Rubber Growers Association, told FE.

In April, scant summer showers with high day temperatures had resulted in tree damage in main production centres like Kottayam, Pathanamthitta and Thiruvananthapuram.

The industry argues that since a majority of the stock is with the growers and processors, the same should be released in the market to address the precarious situation of extreme scarcity.

The SMEs have urged Rubber Board to devise a mechanism so that enough rubber is available to the industry, so that the production process is not hampered.