Just as latex-tapping season is on its final spurt in Indian rubber plantations, international price movement has rammed shut the export opportunity window. Where about Rs 6 per kilo difference( between international and domestic prices) is required for exports to be viable, the margin remains a wafer-thin Re 1 per kilo.
This year’s peculiarity is a staggered season, rubber growers said. Although rubber output last year has fallen by 3% compared to previous year, unseasonal summer rains have sent the typical production schedules go haywire. “Tapping has not come to a standstill in several plantations. And since the prices are good, there is hardly any hoarding,” says CP Krishnan, Head, Commodity Division, Geojit Paribas. Compared to previous year’s 56,545 tonne, rubber exports in 2007-2008 had clocked just 51,381 tonne. With the export gains going negative last week, it looks as if the farmers’ dollar picnic has ended.
At spot market in Kerala, RSS-4 is selling Rs 111 per kilo. The international price of the corresponding grade is Rs 112 per kilo. The end of export-diversion is yet to make rubber stocks lavishly available in domestic market, according to tyre industry sources. The automobile industry demand-push is such that at least seven tyre majors are reported to be going for Rs 6,000-crore capacity expansion in next 18 months. Besides availability, there is also the expense factor. For the Rs 20 per kilo increase in NR price in last two months, tyre industry would suffer an input cost escalation to the tune of Rs 92 crore, according to Rajiv Budhraja, Director-general, ATMA (Automative Tyre Manufacturers’ Association). “In fact, this is the rarest of times when all odds are piled against the tyre industry in terms of high prices for all inputs from NR to carbon black,” he told FE. As the crude prices are pushing synthetic rubber prices, tyre industry is wary to resort to subsitution of NR in a large way. In a Catch-22 situation, the Re 1-margin makes imports as unviable as exports. ?Industry had sought duty-free import of 1 lakh tonne of NR on priority,? says Budhraja. ?Right now, there seems no other short-term solution,? he argues.