Natural rubber prices to remain under pressure

Kolkata: Like many other sectors, there is a demand dearth in the rubber sector as well. Given the present state of affairs in the automobile sector, demand has understandably been tepid from the tyre makers. When it comes to natural rubber, there has been a subdued demand from domestic stockists amid expectations of a rise in supply in the coming days.

Little wonder therefore that natural rubber prices in the key markets of Kerala have been falling continuously in the recent past and analysts think that prices of natural rubber in the key markets of Kerala are likely to remain under pressure due to subdued demand from domestic stockists.

This has to be seen side by side with the fact that the area under natural rubber cultivation rose from 7,78,400 hectare in 2013-14 to 8,20,900 hectare in 2017-18 (provisional estimates), while the tappable area rose from 5,18,100 hectare to 6,12,000 hectare.

However, production fell from 7,74,000 tonne in 2013-14 to 6,94,000 tonne in 2017-18 (provisional estimates), while the average yield per hectare fell from 1,629 kilogram to 1,458 kg. Domestic production has not been able to meet the demand despite a significant rise in tappable area, thanks to falling average yield per hectare.

Interestingly, consumption in India rose from 9,81,520 tonne in 2013-14 to 11,12,210 tonne in 2017-18 (provisional estimates) and imports too posted healthy gains, growing from 3,60,263 tonne to 4,69,760 tonne. Compared to this, global consumption of rubber (both natural and synthetic) increased by 1.9 per cent to 29.2 million tonne in 2018 from 28.4 million tonne in 2017.

The ratio of natural rubber to synthetic rubber consumed in 2018 was 47:53. Globally, the top 10 consumers of rubber in 2018 were China, India, the United States, Japan, Thailand, Indonesia, Malaysia, Brazil, Vietnam and Germany.

It is understandable that India’s natural rubber imports have been high in recent years, staying above the 4,00,000-tonne mark, on the back of rising consumption, which has hovered around the 1-million-tonne level, gong by the Rubber Board of India’s statistics.

When it comes to imports of rubber products, the volume and value are on the rise as well. Malaysia’s Primary Industries Minister Teresa Kok, who visited India last week, said that trade in rubber products between India and Malaysia has increased remarkably over the years.

Exports of Malaysian rubber products to India recorded an average growth of 16.7 per cent per annum from $20.1 million in 2009 to $80.8 million in 2018. Significantly, Malaysia’s imports in the same category from India have increased from $4.1 million in 2009 to $29.7 million in 2018.

Meanwhile, the United Planters’ Association of Southern India (Upasi) pointed out that the south Indian plantation industry in India is facing tough times thanks to low prices and high cost of production.

Upasi said that prices of natural rubber, along with tea and coffee are much below cost of production.  The planters’ association has urged the Centre to immediately intervene and address the issue and come up with a solution in favour of the planters.