Know Your Rubber:

Rubber is an internationally traded commodity with significant usage in wide range of industries. Rubber plant is gathered from Brazil and promoted by Dutch and British empires through out their colonies in South East Asia. They started large scale plantations in Asian countries to meet their needs with industrial revolution.

Now, more than 85 percent of the rubber production comes from Asian countries. Thailand and Indonesia, which together produce almost 60 percent of the natural rubber. Other important producing nations include Malaysia, India, Vietnam and China, with smaller but still significant production in the Philippines and Sri Lanka.

 

Rubber Production in India

India is the fourth largest producer of natural rubber next to Thailand, Indonesia and Malaysia and Second largest consumer of natural rubber next to China.

Though rubber  is produced  in Kerala, Karnataka, Tamil Nadu, and in some north-eastern states like Assam, Tripura  and Nagaland,  Kerala  holds  near  monopoly  in  the  production as well as area under rubber cultivation.  Kerala state alone contributes 90% of the total production of NR in India and hence rubber marketing activities are mainly taking place in this state.

In India, the supply side of NR is highly dominated by small and marginal cultivators.  They contribute about 88% of the NR production in India.

 

Rubber Grades in India

The product mix of Indian rubber growers includes

  • Ribbed Smoked Sheet (RSS 1X, RSS 1, RSS 2, RSS 3 RSS 4, RSS 5, ISS)
  • Technically Specified Rubber(TSR) –  ISNR 5, ISNR 10, ISNR 20 and ISNR 50
  • Latex Concentrates (LC)
  • Pale Latex  Crepe (PLC)
  • Estate Brown Crepe (EBC)

RSS is  the  most important  item constituting by  72.1% followed by  LC(10.7%), TSR(10%), EBC(7%  ) and PLC(0.2%).

 

Rubber Consumption in India

In India, there are nearly 6,000 rubber manufacturing industries and they are producing a variety of 35,000 products. Indian Industries has the capacity to consume the entire indigenous production of natural rubber. Kerala, Punjab and Maharashtra are the major rubber consuming states in India.

Rubber consumption in India includes three segments such as Natural Rubber, Synthetic Rubber and Reclaimed Rubber.  NR constitutes 72% of the total demand for rubber in the country followed by SR at 19% and RR at 9% .

 

Rubber Trade India

Rubber trade is highly dominated by the individual sector of rubber dealers in three different levels such as village, taluk and terminal. These rubber dealers handle about 90% of rubber traded in the Indian rubber market. Kochi and Kottayam are the major terminal markets in India.

 

Futures Trade In Rubber

As a commodity rubber is traded on a number of commodity exchanges world wide.

o   Tokyo Commodity Exchange (TOCOM)

o   Singapore Commodity Exchange (SICOM)

o   Shanghai Future Exchange (SHFE)

o   Agriculture Futures Exchange of Thailand (AFET)

o   National Multi Commodity Exchange of India (NMCE)

 

Factors influencing Rubber price:

 

International Factors:

  • International rubber supply and demand
  • Price movements in TOCOM, SICOM and SHFE
  • Spot prices from Bangkok
  • Crude oil prices and synthetic rubber prices
  • Fluctuation in exchange rates of US Dollar and Yen
  • Growth of the automobile industry
  • Economic growth in China and India

 

Domestic Factors

  • Seasonal factor: low production in summer and rainy seasons
  • Economic growth: stronger the economy greater the demand for natural rubber
  • Government policies: import duties, export duties etc
  • Demand from major tire companies
  • Rubber stock at sellers and buyers
  • Speculation in future markets

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