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Global shortfall puts rubber on a firm wicket

KOCHI: Despite rising imports, prices of natural rubber have remained buoyant throughout the past few months on the back of a shortfall in the

global production.

The import of rubber by tyre companies has touched about 79,573 tonnes during April to August 4, 2009 as compared to 24,264 tonnes during the same period of the year-ago period, growing at a rate of 228%. Stocks

of natural rubber now stands at 1.8 lakh tonnes, against 1.2 lakh tonnes during the same period of last year. Lower exports also added to the stocks.

Despite such a major increase in import and stocks, the rubber price has not seen a downturn. After hovering around Rs 98 to Rs 99 per kg in the past one month, the price touched Rs 100 per kg-mark on August 1. On Thursday, the price stood at Rs 100 per kg.

Global production has registered a 4.5% drop for the 12-month period ended June 2009, which is the steepest after 1952.

Rubber production in Thailand has registered a 18% fall in the first five months, while that of Indonesia fell by 6% in the first half of this year, according to the Association of Natural Rubber Producing Countries. Production in Malaysia fell by 25. % in the first half of the year. Production has seen a fall in most of the countries due to major replanting exercise.

In India, the production has seen a 13% fall in the April-June period of the current year as compared to the same period of last year. On the other hand, the consumption of rubber has increased during this period, supporting the bullish price trend.

Consumption stood at 73,470 tonnes in April 2009. It increased to 73,500 tonnes in June and to 78,000 tonnes in July. Market analysts pointed out that the wide difference between international price and domestic prices was the factor that prompted the user industries to import substantial quantities of natural rubber.

However, the international prices have gone up from Rs 80.17 per kg on July 1 to almost Rs 93.67 per kg on Thursday. The difference in domestic and international prices has also narrowed down to around Rs 6 to Rs 6.5 per kg. Sources said that as a result of this the imports would slow down in the coming days and the user industries would focus on domestic market.

Courtesy : ET Bureau

Media speculations to help the irregularities of Indian Rubber Board. Details will be published on next post.

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