Rubber production, consumption rise steeply

By Our Corporate Bureau | 10 May 2007

Mumbai: Cumulative production of natural rubber in the country in the first ten months of the current fiscal (April 2006 to January 2007) rose to 7,85,835 tonnes from 7,05,230 tonnes during the corresponding period of the previous year.

Production of rubber during January 2007 increased to 96,450 tonnes compared with 93,510 tonnes in January 2006, Rubber Board sources said.

Production of synthetic rubber in the period increased to 84,489 tonnes against 80,471 tonnes during the corresponding period last year. Production, however, marginally decreased to 8,304 tonnes during January 2007 from 8,623 tonnes in December 2006.

Cumulative export of natural rubber in the first ten months of current year was 51,910 tonnes as against 59,533 tonnes during the same period of the previous year. Export in January 2007 was 624 tonnes compared with 4,670 tonnes during January 2006, the sources said.

The February-April period is normally an "off season" for rubber production in Kerala, the state accounting for 92 per cent of the commodity''s production in India. But low production does not always mean a rise in rubber prices.

Currently, the price tag of bench-mark grade RSS-4 is somewhere below Rs90 per kg, closing at Rs87 per kg last week. Even spot prices went down to Rs 85 per kg, to recover later.

In December 2006, natural rubber prices touched Rs95 per kg, while the spot market registered Rs100 per kg on January 27, 2007, and then Rs101 per kg in February. This is despite the fact that the October-January period accounts for 45-50 per cent of the annual rubber production.

The early-2007 movement indicated that natural rubber prices would touch Rs150 by March-April. But the market moved just the opposite way, with natural rubber prices going below the Rs90 mark. Experts blame hoarding for such abnormal market behaviour.

In 2006-07, India imported a record 85,048 tonnes of natural rubber; in 2005-06, 45,285 tonnes were shipped in.
On the other hand, natural rubber exports have slipped. While India exported 73,830 tonnes of natural rubber in 2005-06, exports slipped to 55,309 tonnes in 2006-07.

The upswing in imports and dip in exports is the result of a continuous growth in consumption.

Total natural rubber production registered a growth of 6.3 per cent in 2006-07, while domestic consumption growth was pegged at 2.4 per cent.

However, even this production growth rate could not keep pace with growing consumption, the result of which was an increase in rubber import in the fiscal.