Rubber production fall may lead to further price increase
KOCHI: Bucking the market trend, rubber prices were up nearly 40% in the current peak production season that started in October and ends this week.
With the production set to enter a lean period from February, the prices are likely to remain bullish in the coming months. The price rise in the peak production season is likely to leave the industry with very limited options, says Rajiv Budhraja, director general of Automotive Tyre Manufacturers Association (ATMA).
Both the price and availability will be an issue in the coming days, he said, adding that the industry will have to think in terms of curtailment of production if such a situation arise. Natural rubber prices saw a major jump in the domestic market during the past few months from Rs 169 per kg on October 1 to Rs 235 per kg as on Monday.
The prices are likely to see a further rise in the coming weeks as the production enters a lean phase. The overall production in the current fiscal year is likely to be slightly higher than last years level. During the April-December period, the production was higher 2.8% compared to the same period last year.
In October and November, the production was lower than last years level while in December and January it would be higher, said a Rubber Board official. Still, the prices have remained bullish mainly because of the rise in international prices, which saw a 65% jump from Rs 161.65 per kg in October 1 to Rs 266.61 on Monday.
N Radhakrishnan, president of Cochin Rubber Merchants Association, attributes the price rise to the surge in international prices and withholding of stocks by growers. Moreover, productivity of the domestic rubber plantations has come down as 30% of the area is overdue for replanting, he said.
The domestic rubber production saw! a sligh t dip in October and November due to unseasonal rains in the main centres of production in Kerala. However, the climatic changes had a much bigger impact on the international market as the production remained depressed in Thailand, Indonesia and Malaysia due to adverse weather patterns. Latest reports say that nearly 16,000 hectares in Thailand have been destroyed due to strong winds.
The shortage and price rise in the international market have left the industry with limited options. We have to think of keeping strategic reserves of rubber as it is a key resource like oil, added Budhraja.
With the production set to enter a lean period from February, the prices are likely to remain bullish in the coming months. The price rise in the peak production season is likely to leave the industry with very limited options, says Rajiv Budhraja, director general of Automotive Tyre Manufacturers Association (ATMA).
Both the price and availability will be an issue in the coming days, he said, adding that the industry will have to think in terms of curtailment of production if such a situation arise. Natural rubber prices saw a major jump in the domestic market during the past few months from Rs 169 per kg on October 1 to Rs 235 per kg as on Monday.
The prices are likely to see a further rise in the coming weeks as the production enters a lean phase. The overall production in the current fiscal year is likely to be slightly higher than last years level. During the April-December period, the production was higher 2.8% compared to the same period last year.
In October and November, the production was lower than last years level while in December and January it would be higher, said a Rubber Board official. Still, the prices have remained bullish mainly because of the rise in international prices, which saw a 65% jump from Rs 161.65 per kg in October 1 to Rs 266.61 on Monday.
N Radhakrishnan, president of Cochin Rubber Merchants Association, attributes the price rise to the surge in international prices and withholding of stocks by growers. Moreover, productivity of the domestic rubber plantations has come down as 30% of the area is overdue for replanting, he said.
The domestic rubber production saw! a sligh t dip in October and November due to unseasonal rains in the main centres of production in Kerala. However, the climatic changes had a much bigger impact on the international market as the production remained depressed in Thailand, Indonesia and Malaysia due to adverse weather patterns. Latest reports say that nearly 16,000 hectares in Thailand have been destroyed due to strong winds.
The shortage and price rise in the international market have left the industry with limited options. We have to think of keeping strategic reserves of rubber as it is a key resource like oil, added Budhraja.
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