Rubber falls 15% on low demand

Plummeting demand and rising production in the past few months have triggered a 15 per cent fall in natural rubber prices since September and the industry fears further slump in the coming weeks as the peak tapping season has begun.

The RSS-4 sheet rubber variety used by the tyre industry is selling at ₹120 per kg now, a drop of ₹20 from the beginning of September. “It will be difficult to sustain the interest of farmers in tapping during the peak tapping season with falling prices and dwindling consumption,’’ said PM Thomas, a grower in Kottayam.

According to the provisional figures of the Rubber Board, rubber production increased 13 per cent year-on-year to 2,40,000 tonnes from April to August 2019, while consumption during the same period fell 6 per cent to 4,82,120 tonnes.

Thomas said a price level over ₹140 per kg in the June-August period contributed to higher output. The RSS-4 price averaged at ₹150 per kg in June, one of the highest in recent times. “But from September, prices started declining and the tapping turned sluggish,’’ he said.

Demand crunch is also continuing. “There are hardly any takers for the rubber produced. That along with shortage of tappers may discourage small farmers from tapping,’’ said Pius Scaria, past president of Indian Rubber Dealers Federation.

With local prices rising and rubber becoming cheaper globally, the tyre industry imported large quantities taking advantage of the situation. But April-August figures show a 6 per cent dip in imports compared with last year due to weak demand from the automobile industry, which is going through a slowdown.

“Apart from the main production season, the continuing US-China trade war is also putting pressure on global rubber prices. At present, there is little possibility of a reversal of trend in the short term,’’ said Anu Pai, research analyst at Geojit Commodities.