With summer rains, good demand, rubber tapping continues

The rubber-tapping season, which was to end in February in Kerala, has been extended as a good spell of summer rains and increasing purchases by tyre companies are keeping sentiments high. This is despite the fact that prices have declined over the past few weeks after a rally which started at the beginning of this year.

Domestic natural rubber prices have dropped 6% over the past month to Rs 150 per kg compared to the 18% drop in international prices to Rs 160 per kg during the same period.

The tapping season, which usually ends in February , was extended initially due to the good rubber prices vis-à-vis last year's prices. It seems that timely rains may stretch it for a couple of weeks more.

“Rains have sort of revived tapping. The tyre companies are also buying as imports are costlier now,“ said PM Thomas, a grower based in Kottayam in Kerala. The Rubber Board is anticipating a 16% jump in production to 6.54 lakh tonnes this fiscal from a year ago. Tyre companies are looking for new warehouses to stock rubber as their own godowns are filled to capacity from imports.

“A tyre company recently rented godowns of Pala Rubber Marketing Cooperative Society ,“ Thomas said.

Release of huge stocks of rubber by the world's largest producer Thailand had triggered a price decline after a flood in the country raised prices in the global market two months back. The recent increase in crude inventory in the US and the downturn in oil prices may push down NR prices further as synthetic rubber becomes cheaper.

“Desperate sales as the year is coming to an end may have impacted prices. But crude oil prices hold the key to a further slide in global NR prices in the coming days,“ said CP Krishnan, wholetime director of Geofin Comtrade. However, he felt that Indian prices may not be impacted much as the lean season will begin soon.

The Association of Natural Rubber Producing Countries has said that supply is anticipated to rise in most countries in 2017 and favourable supply-demand conditions along with a set of non-fundamental factors will continue supporting the market from March to May 2017.