Rubber stuck in tight range; analysts say virus spread may dent demand

NEW DELHI: Rubber prices moved in a tight range on Monday, adding to last week’s drop as rising Covid-19 cases continued to dash hopes of a pickup in demand. rubber for April delivery quoted 0.58 per cent lower at Rs 16,510 per 100 kilograms in afternoon deals, having moved within a Rs 287 range.

The contract, due for delivery on April 30, quoted between Rs 16,413 and Rs 16,700 per 100 kg in the first half of the day amid thin trade, near its previous close of Rs 16,607.

The MCX May contract traded Rs 186, or 1.11 per cent, lower at Rs 16,600.

Analysts say concerns over demand for the commodity due to surging coronavirus infections may continue to keep its prices under pressure this week.

“Rising cases of Covid-19 and the imposition of restrictions to control the pandemic are raising worries over demand. A decline in crude oil prices and the US-China trade issues too influenced the market sentiments,” said Anu V Pai, research analyst at Kochi-based brokerage Geojit Financial Services.

However, tight supplies in the spot market kept rubber prices marginally higher, up Rs 19 or 0.11 per cent, at Rs 16,863 per quintal at the last count.

Rubber is currently in a lean production phase characterised with steady demand.

Going forward, analysts will monitor movement in crude oil and economic data, both domestic and from China, closely to assess price trend in rubber.

Brent crude futures were last seen trading 0.40 per cent higher at $ 63.20 per barrel, having moved in a range of $ 63.48-62.42 per barrel earlier on Monday.

“The major risk to the rubber prices in the coming months is increasing coronavirus cases in the European Union, India and Brazil, which could impact demand,” said Manoj Kumar Jain, Director-Head of Commodity research, Prithvi Finmart.

He, however, added that the net-net overall global economic picture appears to be bright which could support rubber demand going forward but the spread of Covid-19 needs to be watched.