[06 Feb] NR Prices Rise on Reports of Low Output

Domestic natural rubber (NR) prices rose in tandem with the global counters, especially with that of Singapore. The benchmark grade RSS-4 variety was today quoted at Rs 135 a kg, while inSingapore, it was quoted at Rs 141.36 a kg.

A week back, contrary to the trend in the overseas counters, local prices had nosedived to Rs 132 a kg. The prices are appreciating across the globe due to reports of lower production. According to the latest estimates of various rubber-linked agencies, production may fall 2.2 per cent compared with the previous year.

Global production is expected to fall to 8.9 million tonnes, which is the sharpest drop since 2000. This is mainly due to curtailment of production by major NR-producing nations such as Thailand, Malaysia and Indonesia in order to ensure a higher price for rubber.

Except China, all leading rubber producers, including India, have registered a sharp fall in production. According to data from the 10-member Association of Natural Rubber Producing Countries, the nine countries which account for 94 per cent of the world’s production had low production and exports.

Thailand, the world’s largest producer, registered a 6 per cent fall in its production in 2009 and production in Malaysia declined 12 per cent. In India also, a 4-6 per cent fall is estimated. OnlyChina, which produced 610,000 tonnes in 2009 registered an increase of 15.1 per cent.

In India the monthly production in January is likely to cross 100,000 tonnes as against 91,900 tonnes in the same month last year. Production in December was 98,000 tonnes against 100,225 tonnes in December 2008.

According to estimates by the Rubber Board, prominent dealers and growers would be having a stock of around 110,000 tonnes. As per the board’s estimate total national stock of rubber as on December 31 was 262,000 tonnes.

The imbalance in local and overseas prices raised hopes for enhancing exports in the coming months. If the difference in prices will be above Rs 10 per kg, India will be an attractive hub for overseas buyers. The export front had a poor performance last year as total exports were 9058 tonnes in April-December period of current fiscal as against 41,232 tonnes in the same period last year.