The price of local natural rubber fell below Rs 130 a kg for the first time since 2009. Markets on Thursday quoted Rs 129 a kg for the benchmark RSS-4 grade.
In three weeks, the price has eased Rs 8 a kg. There is panic in Kerala's growing areas as the price is likely to fall. In most small- and medium-sized plantations, tapping is not taking place, as wages and other expenses are much higher than returns, according to growers.
The local market is facing a demand slide. Imports are much higher in the current financial year. For industrial users, imports make sense, as the Bangkok market on Thursday quoted Rs 108 a kg for RSS-4. According to experts, industrial users import SMR-20 grade, much cheaper in the world market. For SMR-20, the Bangkok market on Thursday quoted Rs 99 a kg. There is a steep rise in the import of this variety. According to latest data of the Rubber Board, in April to July, 133,789 tonnes were brought into the country. This is for the first time that the import has crossed 100,000 tonnes in four months.
N Radhakrishnan, director, Cochin Rubber Merchants Association (CRMA), told Business Standard the price was likely to go down. According to him, there is a possibility the price would touch Rs 120 a kg. The price saw a peak of Rs 240 a kg in April 2011, but started falling from November 2012.
Meanwhile, the global market faces a grim situation. The Thailand military government has approved a plan to sell its 200,000 tonnes on Monday. This could hit prices in the short term.
Thailand, the world's biggest exporter, normally ships 300,000 tonnes a month. Global prices have fallen 25 per cent this year from a year ago, due to oversupply and worries about a fall in demand from top consumer China.
According to experts, the global market will see a surplus for another three years, causing gluts of 652,000, 483,000 and 316,000 tonnes in 2014, 2015 and 2016, respectively.
China is expected to register a gross domestic product growth rate of 7.5 per cent in 2014, the lowest since 2002. This means a slowdown in rubber demand. This could cast a shadow on prices.
The Tokyo Commodity Exchange quoted a lower price on Thursday and all contracts starting September registered a fall ranging from 0.2 per cent to 1.1 per cent. The global market parameters indicate a low price regime for the next few years.
Source:- business-standard.com
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