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KOTTAYAM: Even as the Central Government is making an inordinate delay in declaring a comprehensive package for the ailing natural rubber (NR) farming sector, torrential rain has hit its rubber production in the first quarter of the financial year.

More importantly, the production slipped at a time when the consumption recorded a significant increase, making way for unprecedented import of rubber in the first quarter.

The prospect of domestic rubber market appears to be grim owing to various reasons, including price fall in the international market and uncontrolled import. As per the statistics of the Rubber Board, the rubber production in the first three months (April-June) in this fiscal was 1.26 lakh tonnes against 1.43 lakh tonnes, during the same period in the previous fiscal, recording an 11.9 percent decrease. Consumption was in an upward trajectory, with 3.02 lakh tonne in the same period against 2.64 lakh tonnes in the previous fiscal.

The increase was 14.2 percent. The experts cited various reasons for the increase in consumption, which include the anti-dumping duty (ADD) imposed for the import of truck and bus radial tires from China. This argument is proven right with the substantial increase in the rubber consumption by tire companies, which recorded a 17.7 percent increase in this year. The tire companies consumed 2,16,316 tonnes of rubber this fiscal against 1,83,619 tonne in the same period last year.

What raises concerns among the farmers is the 25 percent increase in the import of rubber, which was 1,18,355 tonnes in the first three months against 94,982 tonnes in the same period the previous year. “The decrease in the natural rubber production and low price in the international market has triggered the import,” an expert told Express.

“However, this would create serious repercussions in the rubber sector in coming months.”
The significant factor is that the price of rubber moved down even while the consumption increased.
“There are various reasons for this phenomenon that include the price fall for rubber in the international market. While the international price of sheet rubber was `30 higher than the Indian market in the first quarter of the previous fiscal, this has turned turtle in this fiscal and the domestic price is `30 above the international price now. If this trend continues, the domestic price is likely to slip down soon,” said sources.

Though the Rubber Board has initiated various measures to promote rubber production, farmers have taken a negative stance towards rubber tapping, taking into account the low income from rubber.

Rubber Production Kerala

TOKYO (July 26): Benchmark Tokyo rubber futures dropped on Thursday amid worries over demand in China, the world’s biggest buyer, due to mounting trade tensions, while a blast outside the US embassy in Beijing raised concerns over political stability.

A bomb exploded outside the US embassy on Thursday, wounding the lone assailant, the embassy said in a statement, but police described the weapon merely as a “firework device”.

“The news raised questions about stability of China’s political situation,” said Hiroyuki Kikukawa, general manager of research, Nissan Securities.

“Investors are worried about both economy and politics of China going forward amid its trade wars with the United States,” he said.

The new Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished at 167.1 yen (US$1.51) per kg, down 1.7 yen, or 1%, from an opening price of 168.8 yen.

The TOCOM benchmark, which sets the tone for rubber prices in Southeast Asia, hovered around a near 22-month-low hit in the previous session.

The most-active rubber contract on the Shanghai futures exchange for September delivery rose 15 yuan to finish at 10,295 yuan (US$1,519) per tonne.

“We hear there may be some impact on rubber output in Yunnan province due to heavy rain, which may cap further losses, but the rubber prices is likely to stay under pressure because of worries over China,” Kikukawa said.

The front-month rubber contract on Singapore’s SICOM exchange for August delivery last traded at 132.7 US cents per kg, unchanged from the previous day.

(US$1 = 110.7100 yen)
(US$1 = 6.7796 Chinese yuan)