Onset of the monsoon triggered a moderate bear rally in the natural rubber (NR) mart as the price of the benchmark grade RSS 4 dropped to Rs 96.50-97 a kg. The market depreciated Rs 3-3.50 per kg in just seven days.
It was quoting at Rs 100 on the 10th of the month. As the monsoon is active in Kerala, tapping and processing was severely affected in most of the rubber-growing areas, and the price is moving southward.
Normally, the monsoon causes a price rise in the market due to poor arrival of quality sheets.
According to local traders the market is under the tight grip of big players in the futures trading and because of this the market reacts abnormally. They added that there is the possibility for further decline in prices as a major chunk of farmers had stocked rubber for reaping the monsoon advantage. So there is a possibility for an increase in supply in the coming weeks and this may badly influence the price line in the main production season, that begins by September. There was a lot of talks among growers that price would touch Rs 130 by June – July.
The drop in production during April and May leveraged the price rise in May and peaked to a recent high of Rs 100. This was against the softening of prices in the international market. Production during these months had dropped by 13 per cent at 106,500 tonnes against 123,115 tonnes in the same months of 2008. But the loss in production was compensated through a sharp increase in import as import rose to 24,743 tonnes against 14,341 tonnes. So there was not a serious supply crunch in the NR market. But the Indian market was higher by Rs 17 per Kg on an average than the global market throughout April and May. The gap is almost same even after depreciation in local prices giving a scope for more imports in the current fiscal year. The global market also moved in the same line to quote Rs 80 a Kg in this week.
The global market has severely affected a squeeze in demand as major consuming countries have slashed their purchase to a great extend.
The consumption of NR by USA dropped by 50 per cent and that of EU dropped by 40 per cent.
Japan’s purchase reduced by 25-30 per cent and Chinese demand dropped by 5-10 per cent. World over NR market is facing a serious crisis as demand side is being weakened heavily due to the current economic turmoil. So local traders and growers feel the heat of a stronger bear mode in the coming weeks even in the midst of cool monsoon showers.
Export of tyres has dropped 26 per cent in April this year at 350,280 units against 471,313 units in April of 2008. All category of tyres except jeep performed badly on the export front according to latest ATMA estimates.
Most serious casualty was industrial tyres in which the drop was 96 per cent. Only 70 such tyres were shipped in April against 1709 in the same month of last year. A 91 per cent drop registered in tractor trailer segment at 164 124,623 truckôbus tyres were exported, registering a drop of 18 per cent against 152,783 units. In passenger car segment export was 50,049 units against 74,312 units, registering 33 per cent decline.
Meanwhile, total tyre production in April increased by 9 per cent at 72,60,404 units against 66,73,255 units in April last year. Truckus and jeep segment had a growth 6 per cent each while passenger car segment had grown by 7 per cent. 13 and 14 per cent growth registered in motor cycle and scooter segment respectively, as per the data of ATMA.